Hospitals battle over failed merger

When Tufts-New England Medical Center merged with Rhode Island hospital group Lifespan in 1997, both partners hailed the deal as a huge win. The venerable Tufts-New England Medical Center (NEMC), which has been open since the 1796, had prestige but too much debt and too little competitive leverage. At the time, execs believed that Lifespan could give NEMC the competitive edge it needed. But sadly, some marriages are doomed to end in divorce. Today, Lifespan and NEMC are locked in a pitched legal dispute over the unwinding of the deal.

The problem began five years into the agreement, when NEMC wanted out, and agreed to pay $30 million to exit the deal. Later, after looking over its numbers, NEMC decided to stop making payments, arguing that Lifespan had drained away cash reserves and substantially mismanaged the hospital. Now, Lifespan wants NEMC to pay it $3.66 million, the equivalent of two installments on the $30 million agreement. NEMC execs refuse to do so, choosing instead to fight it out in court, and the battle continues.

To get more background on the squabble:
- read this piece in The Boston Globe

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