Why Merge?
The Case for the Lifespan/Care New England Merger

• The Way of the Future
• Proven Benefits
• A Time of Unprecedented Opportunity
• Economies of Scale
• Risk of Inaction
• Short- and Long-Term Returns

The proposed merger of Lifespan and Care New England will enable our hospitals to better serve the community by enhancing our ability to provide and develop programs and services that meet the needs of our patients and support the hospitals’ missions.

In July 2007, Lifespan and Care New England Health System announced plans to merge and create a single, comprehensive hospital system. The merged system would serve as a hub for highquality medicine, a magnet for medical and scientific professionals and a catalyst for future economic development opportunities. This Issue Brief explores the reasoning behind, and benefits of, the proposed Lifespan/Care New England merger.

The Way of the Future

Across the United States, mergers of hospitals and hospital systems have become increasingly common. Indeed, between 1998 and 2005, more than 1,100 hospitals were involved in mergers and acquisitions.¹ Rhode Island is no exception to this trend: over the past 24 months alone, nearly every Rhode Island-based hospital has considered or is considering consolidation.

Proven Benefits

Both Lifespan and Care New England are, themselves, hospital systems created through mergers. The systems’ thirteen- and eleven-year histories, respectively, testify to the benefits of locally controlled, nonprofit networks of hospitals. The collaborative opportunities made possible through multi-hospital systems have resulted in programs that benefit not only Lifespan’s and Care New England’s own patients, but Rhode Islanders as a whole. For example:

• The combined tertiary clinical programs at Lifespan and Care New England hospitals have made Rhode Island a net importer of patients from outside the state.
  
  
• The growing combined research enterprise of Lifespan, Care New England and The Warren Alpert Medical School of Brown University has led to the rejuvenation of the once-fallow Jewelry District, with the Coro, Claverick, Kilguss, and Speidel buildings now home to vibrant research labs and clinical teaching space.
  
  
• The partnership between Butler Hospital and Women & Infants Hospital brought a new level of care for pregnant and postpartum women suffering from depression with the development of new and specialized services, including the nation’s first postpartum day hospital.
  
  
• Both Lifespan and Care New England have made significant investments in training and education opportunities for the health care workforce, helping to mitigate the statewide nursing and technical employee shortage projected to grow to historic levels over the next decade.
  
  
• Lifespan has marshaled the resources of all its member hospitals to focus on emergency preparedness—and Lifespan’s efforts have been critical to the State’s significant strides in this area. Presently, Rhode Island Hospital serves as the only Level I trauma center in the state. The proposed creation of the first Level II trauma center in the state—at Kent Hospital—would further increase Rhode Island’s capacity to respond to disasters.
  
  
• Lifespan alone has added nearly 1,500 jobs in the last four years; Care New England has increased its workforce by 600.

A Time of Unprecedented Opportunity

With the growth and planned relocation of The Warren Alpert Medical School of Brown University to a site on or near the Rhode Island Hospital campus, Rhode Island has a golden opportunity to develop a truly comprehensive, nationally competitive academic medical center. The merger of Lifespan and Care New England would turn this possibility into a reality: the relocation of Butler Hospital to the Rhode Island Hospital campus and the creation of an endowed Brain Science Institute, would give Rhode Island a cohesive academic medical campus rivaling those in Boston and New Haven. This would enable us to compete for the most highly skilled researchers and clinicians on a regional and national basis.

Drawing top researchers and major grant funding to Rhode Island through member hospitals and Brown University’s Warren Alpert Medical School would improve Rhode Island’s already high-quality health care. The influx of researchers and grant funds would also have positive effects on Rhode Island’s economy as a whole: the biotech spinoffs and other businesses that arise from research discoveries will provide high-skill, well-compensated job opportunities for thousands of Rhode Islanders.

A merger will also put Lifespan, Care New England, and their member hospitals in a better position to withstand the volatile financial environment that hospitals face today and in the future. A stronger financial footing through greater economies of scale and efficiency will allow member hospitals to focus anew on their missions—including providing care to the uninsured and underinsured, and investing in their communities to improve health status and health care access.

While Care New England is currently working to streamline costs, it is anticipated that there will be further opportunity for efficiency once the two systems join, including shared administrative services which will avoid duplication and save costs.

Economies of Scale

The merger of Lifespan and Care New England will make possible large investments that a stand-alone hospital, or even a smaller hospital network, could neither justify nor afford. For instance, Lifespan has invested nearly $100 million in information technology since its inception, creating a private, secure, wide-area health information network. The merger will make possible the expansion of that network to Care New England, and the creation of an integrated, user-friendly technology interface that would allow physicians across the merged institutions to have access to their patients’ electronic health records—resulting in minimal duplication of tests, faster patient admissions, quicker access to lab results, and faster start time for treatments. In addition, the combined resources of the merged system would better enable the system to upgrade or replace information technology that becomes outdated or obsolete.

Recent studies point to the increasing advantages of larger systems, including lower supply costs, improved cost of capital, manageable labor expenses, and leveraged information technology spending.²

Scale also means reach—the systems, if combined, will provide full- and part-time employment to more than 17,500 people, and will have more than 3,000 physicians on the medical staffs of their affiliated hospitals. As Rhode Island’s manufacturing base continues to decline, it is offset by growth in the health care industry. The health care industry draws upon a well-educated, highly skilled workforce, which will continue to grow as an aging population creates greater demand for specialized health care services.

Risk of Inaction

Rhode Island has recently been recognized as one of the nation’s top states for health care—number one in quality and sixth overall.³ This is certainly an accomplishment worthy of celebration, but we cannot afford to rest on our laurels. Make no mistake: If Rhode Island does not take decisive steps in the short term to develop a truly comprehensive, competitive academic medical complex, specialty care, research jobs, grant funding, and private resources—as well as the economic development opportunities that follow—will flow elsewhere. This concern is not theoretical: Just recently, for example, Columbia University announced its own plans to develop a brain science center; and Partners HealthCare is well underway on the construction of a new advanced cardiovascular care facility in Boston and a new sports medicine center and outpatient surgical clinic in Foxborough.

Short- and Long-Term Returns

In the short term, Rhode Islanders can expect that a merger of Lifespan and Care New England will result in better, more integrated care. The clinicians at Women & Infants Hospital, for instance, will be able to work more seamlessly with the specialists at Hasbro Children’s Hospital. The convergence of medical and mental health treatments in the care of patients with psychiatric disorders will be facilitated by the close proximity of a relocated Butler Hospital on or near the Rhode Island Hospital campus. And, the closer coordination of emergency and trauma services between the Lifespan hospitals and Kent Hospital will improve the state’s ability to respond to emergencies and disasters.

In the long term, the benefits will be even greater. The merger will help ensure the continued success of a locally controlled, nonprofit network of hospitals and health care providers. This network of providers will work in partnership to deliver topquality, cutting-edge care for people throughout southern New England. Keeping those people in-state, rather than forcing them to travel to Boston or Worcester, will make patients more comfortable and make Rhode Island a more attractive place to live. Out-of-state research dollars will lead to medical breakthroughs that, in turn, will lead to new business opportunities.

Lifespan and Care New England have improved health care in the state, have created opportunities for their employees, and have reached out to the community, offering programs and services that go well beyond their missions. The coming together of these two well-respected systems will create even more opportunities for Rhode Islanders in the future.

¹ American Hospital Association, “Trendwatch Chartbook 2007: Trends Affecting Hospitals and Health Systems,” April 2007.

² Citi, Presentation to the State Hospital Association Executives Forum, August 3, 2007.

³ J. C. Cantor, C. Schoen, D. Belloff, S. K. H. How, and D. McCarthy, “Aiming Higher: Results from a State Scorecard on Health System Performance,” The Commonwealth Fund Commission on a High Performance Health System, June 2007.

More about the Lifespan/Care New England Merger