Partners drops bid to acquire Care New England

PARTNERS HEALTHCARE last week obediently bowed out of its planned merger with Care New England after Rhode Island’s governor signaled her strong desire that the Providence-based health system retain local control.

The decision by Boston-based Partners put a cap on a tumultuous, yearslong process of trying to acquire Care New England, a deal that was still under regulatory review in Rhode Island.

Partners interim CEO Dr. Anne Klibanski hinted in a statement that a merger is not off the table. “We look forward to reengaging at the appropriate time—especially with a fully integrated local system,” she said. “We greatly value our relationship in Rhode Island and want to do what’s best.”

Partners’ decision followed Gov. Gina Raimondo’s request that Care New England, Lifespan and Brown University resume their own merger talks, which have been on and off over the years.

It’s possible Partners was quick to comply with Raimondo’s request because the health system had already faced scrutiny from Massachusetts officials, said Nancy Kane, a management professor in Harvard T.H. Chan School of Public Health’s health policy and management department.

“They got their hands slapped so many times in Massachusetts that they probably don’t want to deal with that in Rhode Island,” she said. None of the health systems involved agreed to comment for this article.

It’s unclear why previous attempts to unite Care New England, Lifespan and Brown didn’t pan out. One reason may have been fear that services would be consolidated across the three systems’ facilities in Rhode Island, Kane said, adding that it’s still a strong possibility.

“The trouble when you’re in the same market: The possibility to consolidate services is high,” she said. But a deal between Partners and Care New England, which at times included Lifespan and Brown, would have likely meant Rhode Island losing jobs, according to Jay Gerzog, a partner with law firm Sheppard Mullin.

Partners, which generated $131 million in operating income in the quarter ended March 31, now faces stiff competition from the newly formed Beth Israel Lahey Health.