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Analysis

Did Care New England CEO's Demand for Top Job Thwart 3-Way Merger?

By Steven Porter  
   September 20, 2019

A letter from Rhode Island Gov. Gina Raimondo suggests leaders of the Providence-based health system may be to blame for talks unraveling over the summer.

After less than six weeks at the negotiating table, the leaders of Care New England (CNE), based in Providence, Rhode Island, walked away last July from a potential three-way deal with Lifespan and Brown University.

Although they said the discussions were collaborative and respectful, CNE President and CEO James E. Fanale, MD, and board chair Charles R. Repucci cited concerns over the potential deal's capital requirements, the expected financial stability of the combined system, antitrust considerations, the community's needs, and other factors.

A letter that Rhode Island Gov. Gina Raimondo sent to Repucci in August, however, suggests that a tussle over who would take the top leadership role may have been a contributing factor as well. Raimondo's office confirmed the authenticity of the letter, which was obtained by The Providence Journal's editorial board and revealed Thursday in a report by G. Wayne Miller.

"It is unfortunate for Rhode Island that the CNE Board held as a condition of your continued engagement in the process that Dr. Fanale be installed as the CEO of the merged entity, and that he lead the transition," Raimondo wrote to Repucci, as the Journal reported.

A spokesperson for CNE told the Journal that the health system takes its non-disclosure agreement seriously, so it will not "engage in any specific discussion covered by that agreement."

When asked for comment, Lifespan President and CEO Timothy J. Babineau, MD, and board chairman Lawrence Aubin Sr., told the Journal, "Regrettably, the letter speaks for itself."

A spokesperson for Brown University didn't respond immediately to the Journal's request for comment.

Boston-based Partners HealthCare had been in late-stage talks to acquire CNE, but it dropped its acquisition plans in June, when CNE entered into the short-lived three-party negotiations, at Raimondo's urging.

Repucci asked Raimondo to nudge Partners to revive their merger bid, but Raimondo declined to do so, as the Journal reported.

Related: Care New England Dumps On-Again, Off-Again Merger Talks: 'We're Kind of Tired'

Related: Partners HealthCare Picks First Woman as President and CEO

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The governor's letter said it's 'unfortunate' that CNE's leaders insisted, as a condition of ongoing talks, that CNE's CEO be in charge.

By entering into the latest round of negotiations, at the governor's urging, CNE missed out on its deal with Partners HealthCare.

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