Landmark: Hospital merger would create monopoly
Woonsocket hospital officials express concerns over proposal to consolidate Lifespan, Care New England
WOONSOCKET – Landmark Medical Center has stepped into an ongoing review of the proposed Lifespan and Care New England Health System (CNE) merger with testimony opposing the transaction on grounds it would create a health care monopoly in Rhode Island.
Landmark CEO Michael Souza said he offered the local acute care hospital’s opposition at a recent meeting of the state’s Health Services Council on the merger as well as in letters to R.I. Attorney General Peter F. Neronha’s office and Fernanda Lopes, chief of the Office of Health System’s development.
The Health Services Council had scheduled testimony on the merger for Jan. 20 and Jan. 26 and accepted written comment until Feb. 1, under the120day review the Department of Health and the Attorney General are conducting under the state’s Hospital Conversion Act requirements for changes of effective control for health care organizations in the state. The review process deadline under the 120-day rule comes up on March 16.
The Federal Trade Commission is reviewing Lifespan and Care New England’s filing on their proposed merger and is expected to decide to proceed with a formal review or pass on the issue by the end of the month.
Souza said Prime Healthcare-owned Landmark is hoping that either the FTC intercedes to block the transaction or that, if the local review process continues, the state regulators and the Attorney General would acknowledge Landmark’s stated concerns.
“We hope that it doesn’t get approved, or if it does get approved, that they set strong conditions on the merger,” Souza said.
Those conditions might also be an opportunity for the state to reduce the merger’s overall impact on the Rhode Island market by limiting its scope in some way.
Although such talks could not be held now with a merger pending, Souza said Landmark would be very interested in working out a partnership with Care New England’s Kent County Memorial Hospital as a way to expand its own footprint in Rhode Island.
“They are in an agreement right now and as result we are not allowed to talk to them,” Souza said while explaining such a proposal is not currently under
discussion.
In in his testimony to the Attorney General and Department of Health, Souza pointed to the proposed merged hospital entity as holding an estimated 80 percent of hospital revenues and services statewide.
“An unfair competitive advantage would cause harm to the healthcare system in Rhode Island,” Souza maintained.
“Besides the numerous healthcare services that would be monopolized by the new company, it would also have an impact on the labor market. Other providers of healthcare would have extreme difficulty recruiting staff against the new company,” Souza said.
Landmark’s CEO noted that the hospital’s parent, Prime Healthcare has been in Rhode Island eight years to date and has invested more than $50 million into Landmark Medical Center during that time.
“This investment, along with great community partnerships and operations of the hospital, has provided an improved healthcare system in Northern Rhode Island,” Souza said.
“In order to minimize the anti-trust issue of the proposed merger, Prime Healthcare would be willing to acquire Kent Hospital and infuse much needed capital, along with a cash consideration,” Souza told the regulators.
The proposed new Lifespan-Care New England entity- – a combination of Care New England’s Kent County, Women & Infants Hospital of Rhode Island, Butler Hospital, and Lifespan’s Rhode Island Hospital, The Miriam Hospital, Newport Hospital and Emma Pendleton Bradley Hospital—would have a “detrimental effect on all healthcare providers outside of the area covered by the hospitals that part of the application,” Souza noted.
“Communities such as Northern Rhode Island will be harmed as the healthcare providers will not be able to compete; therefore, reducing access to a vulnerable community,” the hospital CEO added.
Souza also pointed to an overall increase in the cost of healthcare in the state as a potential result of the proposed merger.
“Creating an organization with the highest paid facilities in the state will increase the cost of healthcare and premiums to employees,” Souza said.
Although the state’s health insurance commissioner regulates and limits rates increases for a small population of commerce employers, Souza said it would be “very difficult to not have a cost impact with an organization with the this type of market power.”
A further increase in health care costs would “deteriorate the healthcare industry and the health of the residents in Rhode Island,” Souza said.
“This application will not increase jobs, but in fact, decrease jobs in communities which are not represented, as health care providers cannot compete or afford the cost of care,” Souza noted.