It is now well over a year (October ’07) since I wrote glowingly in this space about the proposed merger of Rhode Island’s two leading healthcare networks, Lifespan and Care New England. If it was as good an idea as I described then, some might be wondering why it hasn’t happened yet. So am I.

I outlined the vast economic development potential of the hospital networks joining with the Warren Alpert School of Medicine at Brown to create a truly world class academic medical center in our State. I spoke of how such organizations to our north in Boston and south in New Haven are dynamic engines of their local economies, attracting patients for high end procedures, grant money from research foundations and medical/pharmaceutical companies, and creating an array of high paying jobs capable of lifting the local economy out of its current malaise. I also hinted at a sense of competitive urgency lest these established and growing entities eye our market for their own expansion, perhaps permanently vanquishing this opportunity for Lifespan and Rhode Island.

Evidently my enthusiasm wasn’t sufficiently persuasive to overcome more pedestrian polemics. Chief among the objections are the possibly negative impact on the remaining community hospitals, and the potential for such a dominant provider to drive higher reimbursement from payers, resulting in higher health insurance rates for employers here. In a competitive free market, I would concede both arguments merit trepidation, if perhaps not the complete paralysis that has apparently resulted. I admit we are talking about one provider likely to retain over 70% of the State’s acute care market share. The merged entity will be a competitive goliath easily capable of determining the future shape, size, and nature of the local healthcare delivery system on every level. Few disagree though that fundamental reform of the healthcare delivery infrastructure is necessary to contain costs, assure access to all, and improve quality.

If not Lifespan then, who or what will determine the course of this inevitable evolution? I described their organization as the only one with the critical mass, vision, and economic resources to get the job done, so if we don’t agree, some new or existing authority must either emerge or step up to the plate. Time as they say, is a-wasting.

Partners Healthcare in Boston is a potential model organization formed by the merger of Mass General and Brigham and Women’s Hospitals with the Harvard Medical School. A recent Boston Globe article looked at what affect Partners has had on the healthcare landscape in our neighboring state. The results are clearly mixed. While I doubt anyone in Boston would like to see Partners go away, they have indeed extracted markedly higher rates from local insurers. Comparative insurance premiums in the MA market are significantly higher than those in RI. Competing relatively unrestrained, the effect of Partners’ expansion (such organizations must always grow) on the nearby community hospitals could be described as enigmatic.

On the north shore Partners bailed out the failing hospital in Salem and made it part of its network, preserving acute care services there. Likewise, Newton-Wellesley hospital has prospered after joining Partners, although it now threatens the hospital in neighboring Natick. In nearby Norwood an interesting situation is developing as the local hospital, already affiliated with the Catholic network Caritas Christi, seemed to have been stabilized, but is now gravely endangered by the huge new Partners facility just down the road in Foxboro. Beverly Hospital too, seems to have been targeted by Partners’ imperialism, as its gleaming new outpatient facility, built with nearly $30MM of the community’s money, will be in stifling proximity to a brand new, even larger and more expensive Partners edifice.

I would remind my business brethren that this is not like Walgreens building kitty corner to CVS, or Lowes almost adjacent to Home Depot. Consumers generally benefit from the more intense price competition in those cases, while the capital costs of such facilities are relatively nominal compared to a hospital. And these hospitals don’t compete on price! Indeed, the invading competitor often benefits from higher reimbursement negotiated by its powerful parent, tilting the competitive table in an unnatural and insurmountable way.

Yet we continually hear about “market based” solutions, and the benefits of competition in health care. Is it any wonder regulators faced with the Lifespan/CNE merger seem befuddled?

Before giving up the floor, perhaps I could make a few specific suggestions:
• Why shouldn’t ALL hospitals in RI become part of a single network?
• We must have a comprehensive, coordinated health planning process.
• AND an appropriate, non-political public oversight body for the entire system.
We can’t drag our feet on the Lifespan/CNE merger or the future of our healthcare delivery system much longer.

Ted Almon
President, CEO Claflin Co.
401-739-4150 or tedalmon@claflin.com