In a sign of ongoing flux in Rhode Island’s hospital landscape, a Pennsylvania company has made its second offer in two years for Care New England, the state’s second-largest hospital group.
The offer comes less than a week after Attorney General Peter Neronha rejected a merger between CNE and Lifespan, saying it would usher in an anti-competitive entity that would erode the quality of healthcare in the state while raising costs for consumers.
In related news, Lifespan and CNE used a joint statement to say they will not pursue litigation over the rejection of the merger by Neronha and the Federal Trade Commission, and they said they will not seek a legislative end-run known as a COPA, or Certificate of Public Advantage.
CNE and Lifespan said they are withdrawing their Hospital Conversion Act application from the state Health Department.
In a statement, the two hospital groups said, ”The organizations continue to believe the combination of the systems would have greatly enhanced the clinical, academic and research missions, reduced costs and improved the patient care environment. 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.”
“Leadership is focused on figuring out, with our academic partner, Brown University, the best path forward for the community in terms of cost, quality and access to healthcare in an extremely challenging environment,” the statement said.
StoneBridge Healthcare of New Hope, Pennsylvania, outlined its latest offer for Care New England in a news release.
The company, which bills itself as an innovative firm for buying, saving and turning around distressed hospitals, said it is offering $250 million for Care New England and that it would invest an additional $300 million over seven years.
“Care New England Health System has provided outstanding care to its patients for many years, and StoneBridge Healthcare is committed to the continuation of this high standard of care in Rhode Island,” Joshua Nemzoff, CEO of StoneBridge said in a statement. “We believe that StoneBridge Healthcare is in a strong position to help Care New England continue delivering cutting-edge care to the communities it serves for years to come.”
StoneBridge describes itself as a privately-owned company capitalized through a multi-layered composite finance group.It states that it is not owned or controlled by any private equity firms and will complete the CNE transaction as a nonprofit 501 (c) 3 entity.
Care New England includes Kent Hospital in Warwick and Women & Infants and Butler Hospital, both in Providence.
Asked for comment, CNE provided this statement from Chief Marketing Officer Jess McCarthy: “It is important that we take a moment here at Care New England to meet, in person, with the staff at each of our operating units to answer any questions or concerns that they might have. We are happy to speak with our friends in the media, but we must have conversations with our internal colleagues first and foremost, and we are rounding with them throughout this week.”
On Thursday, Lynn Blais, president of United Nursing and Allied Professionals, the state’s largest healthcare union, issued a statement raising concerns about StoneBridge’s offer for Care New England.
“Our union has major concerns about this potential sale, and we urge Care New England and state leaders to ask the tough questions,” Blais said. “Is StoneBridge, which was just created in 2020 and has never owned a single hospital, truly a “not-for-profit” or are they a for-profit masquerading as a not-for-profit? Will the not-for-profit StoneBridge pay exorbitant management fees back to their for-profit operation, similar to how the “not-for-profit” Prime Healthcare does it with Landmark Medical Center in Woonsocket? Will StoneBridge be another Prospect Medical Holdings, who has consistently put profits before patient care, and used Our Lady of Fatima and Roger Williams Medical Center as collateral to take huge loans and then pay dividends to shareholders – all while pulling resources away from the actual healthcare facilities? Put simply, is StoneBridge a wolf in sheep’s clothing?
Blais added, “StoneBridge’s Josh Nemzoff has said he’s not doing this to “make a lot of money”, but we have reason to be skeptical. We’ve seen this scenario play out before, right here in Rhode Island. An out of state operation comes in saying all the right things and making all the right promises, only to turn around and break these promises once they gain a foothold in Rhode Island, all to make a quick buck. Care New England and state regulators can’t rush into an agreement that will plunge Rhode Island further into the depths of for-profit healthcare. Now is the time to be deliberate, speak to the key stakeholders, and make an informed decision that ensures we don’t allow any more bad actors onto the healthcare scene in Rhode Island. Our healthcare professionals and patients deserve nothing less.”
This story has been updated.
Ian Donnis can be reached at idonnis@ripr.org. Follow him on Twitter @IanDon and sign up for email delivery of his weekly RI politics newsletter.
