Lifespan Corporation and Care New England Health System have withdrawn their bid to merge in the wake of resistance from the Federal Trade Commission (FTC) and the attorney general of Rhode Island.
In a Wednesday joint statement, the Rhode Island systems said they still believe a merger would have "greatly enhanced" their clinical care and research goals.
"Both organizations are committed to partner in ways that are appropriate from a legal perspective and allow them to best serve the needs of the community," the systems said in a statement.
The FTC and Rhode Island Attorney General Peter Neronha came out against the deal on Feb.17, citing concerns of raised prices and reduced quality of care.
According to the FTC, the merger as proposed by the companies would see the joined entity control at least 70% of Rhode Island’s market for inpatient general acute care hospital services as well as at least 70% of the market for inpatient behavioral health services.
Further, the attorney general’s office wrote in its review that the combined organization would control over 60% of the state’s market for “many” outpatient surgery specialties, would employ two-thirds of the state’s registered nurses working full-time at a hospital, and see about half of all commercial spend for Rhode Island members through their accountable care organizations.
“Put simply, if this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their healthcare costs go up, for healthcare that is lower in quality and harder to access,” Neronha said in a statement.
The FTC also noted in its release that the combined organization’s competitive stranglehold on inpatient acute care and behavioral health services would extend into 19 nearby Massachusetts communities.
“By eliminating competition between Lifespan and Care New England, this merger would create a new healthcare conglomerate with outsized power over the entire continuum of healthcare services,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. “As this country struggles to recover from a devastating pandemic, we can’t afford to allow this kind of concentrated control over critical healthcare services. I am pleased to partner with the Rhode Island Attorney General in suing to block this illegal merger to preserve patient choice.”
The Providence, Rhode Island-based nonprofits have been working toward a merger since September 2020, when their boards voted to move forward with a letter of intent. The organizations and Brown University, which had planned to be an affiliate, aimed to create a seven-hospital, 23,500-employee integrated academic health system they said would offer patients the full gamut of medical services and complementary specialty care.
To evaluate the deal, Neronha’s office conducted a “thorough and exhaustive review” that incorporated comments and testimony from the public. On Thursday, the office announced that it has denied their application to merge.
“Our review clearly established that Lifespan and CNE compete aggressively with each other across many inpatient and outpatient service lines,” Neronha said. “Eliminating this competition will have the same effects here as seen across the country following mergers of this size: rising healthcare costs, lower quality and reduced access. The parties simply have not demonstrated why these results would not happen here and how they would be able to deliver on promised benefits that would outweigh these risks.”