Care New England appears to decline StoneBridge Healthcare purchase offer of $550M

The Care New England Health System appeared to decline a new merger offer from Pennsylvania-based StoneBridge Healthcare, a new company aiming to turn around distressed hospitals.

Care New England’s President and CEO James Fanale said Tuesday that the “best direction” for the Rhode Island-based system is to continue with a merger with Lifespan Health System in the same state. The statement didn't mention the $550 million purchase offer from StoneBridge.

“The merger conversations we’ve embarked on are the right ones, and they will continue expeditiously and exclusively,” Fanale said in a statement. “Teams from Care New England and Lifespan are working now to solidify this exciting vision by marshaling data around the inner workings, financials and metrics around quality of care and community care.”

Fanale did not mention StoneBridge but the statement came a day after StoneBridge announced its intent to purchase Care New England for $550 million with a purchase price of $250 million and $300 million investment for capital improvements.

“As the cost of care has risen and the COVID-19 pandemic has placed a tremendous strain on health systems across the nation, StoneBridge Healthcare is ready to assist Care New England during these challenging times to continue delivering an outstanding continuum of care to the region," said StoneBridge CEO Joshua Nemzoff in a statement on Monday.

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StoneBridge was formed back in August. The company said its goal is to buy up hospitals in distress and turn them around.

“StoneBridge Healthcare was in the works long before COVID-19, but the disease has only accelerated the need for distressed hospitals to be saved,” according to a release from the company back in August.

The company is backed by the $20 billion real estate investment trust MPT, which currently owns nearly 400 hospitals, and Oak Tree Capital.

The two-hospital system Care New England is the latest system to get a purchase offer from StoneBridge. The company also made an unsolicited $475 million offer to buy the Tennessee-based, six-hospital Erlanger Health System.

Care New England also was an unlikely target for the acquisition as it signed a letter of intent with Lifespan back in September that it agrees to exclusively negotiate a merger with only Lifespan.

“The exclusivity agreement with Lifespan bars Care England and its executives from talking to any other would-be suitors,” according to Fanale’s statement.