The United States is experiencing dramatic changes in healthcare and nowhere is this more evident than right here in Rhode Island in the debate over the acquisition of Care New England (CNE) by Partners Healthcare in Boston. I was one of a very small group of leaders at CNE that established the relationship with Partners over nine years ago and I had responsibility for maintaining and growing it over those years until 2018. That relationship grew from a simple clinical one to something that now forms the basis for the billion-dollar CNE acquisition. There are some pragmatic facts that state leaders, regulators and the public should consider regarding this important decision.
Some of the most important and under reported facts relate to the financial benefits to Rhode Islanders of a Partners acquisition of CNE: pension guarantees, hospital capital financing, the preservation of jobs and the prevention of healthcare monopolies. One of CNE’s debts is a staggering $70 million underfunded pension at the now closed Memorial Hospital. This was caused by decades of almost criminal mismanagement of hospital operations and pension fund investments by the prior Memorial hospital leadership long before Memorial entered CNE in 2013. When combined with CNE’s own pension shortfall, this sum totals $90 million. This enormous debt would accrue to Partners once CNE is acquired. That’s a $90 million benefit for Rhode Island.
The three hospitals that make up CNE: Women and Infants, Kent and Butler, are at a once in our lifetimes point in terms of their need for capital. Capital is the money hospitals need to replace buildings, technology and equipment. Over the next decade, those costs will be hundreds of millions of dollars. One example of the need for capital: there is a measure in healthcare called the, “average age of plant”, that refers to the age of the facility and its equipment. The average for hospitals in the U.S. is a little over 10 years. CNE’s now stands at over 18 years. Just like building a house, fixing this will require loans and the CNE hospitals, which are now profitable, could certainly make the payments on that debt if they had favorable access to the bond markets that Partners could provide.
Partners/CNE will preserve hundreds of jobs compared to a Lifespan/CNE merger. A Rhode Island only merger would lead to the “consolidation” of clinical services and the elimination of jobs. Not just executive jobs, but front line, predominately union, positions. There would be hundreds of nurses, technicians and other well paying jobs lost. The negative economic effects on Rhode Island would be enormous and amount to tens of millions of dollars per year…forever! Contrast this with Partners/CNE, which would likely preserve those jobs and clinical services in order to compete effectively.
Competition is a very good thing in health care and it improves quality and reduces costs. Where I work now in Virginia, my health system competes against hospitals from Washington, DC, to Richmond to North Carolina. Sometimes we win, sometimes not, but always the patients are advantaged because of choice and because competition simply makes us better at what we do. There is no metro area of a million people or more in the U.S. that is served by only one healthcare system. Why would Rhode Island want to be the first?
There are anticompetitive forces within Rhode Island that have begun to mount an offensive against Partners/CNE and include what amounts to a cartel of Lifespan and many of its associated physicians. Some of these physicians are employed and some affiliated via separate groups or private corporations. Recently, these doctors signed full-page petitions in newspapers, paid for by Lifespan, that speak about “devastating consequences” if Partners were to acquire CNE. What these physicians don’t disclose to the public is that many of them have very substantial personal financial interests that could be adversely affected due to the proposed merger. Some of these conflicts of interest relate to healthcare business ventures, others to individual compensation that could be impacted by competition. Collectively, they amount to many millions of dollars each year. Monopolies are not good for anyone and the only “devastating” thing about Partners/CNE would be to those who want to establish them.
The Partners/CNE relationship has benefited tens of thousands of lives and it has done so predominately by keeping care local within the state. Building walls around Rhode Island is not the solution to preserving our healthcare institutions. Providing financial strength and sustainability to those institutions that can be directed towards patients and ensuring a competitive landscape that raises the bar on quality, is the path most likely to succeed and benefit the generations to come.
Michael J. Dacey Jr., MD, MS, FACP is the Executive Vice President/Chief Operating Officer of Riverside Health System in Newport News, Virginia. Dr. Dacey worked at Kent Hospital for 17 years, leaving in January 2018 as President and COO.