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Lifespan, Care New England withdraw merger application

by John R. Fischer, Senior Reporter | February 28, 2022
Business Affairs

Hours before the two withdrew their application, StoneBridge Healthcare, a Pennsylvania company that purchases and helps “financially distressed hospitals”, according to its website, offered a $550 million bid for CNE. The transaction would include $250 million upfront and an additional $300 million invested over seven years for capital improvements.

The company previously offered the same amount for CNE in December 2020. The healthcare system rejected the bid in favor of a possible merger with Lifespan. With this more current offer, Stonebridge said it would also fully fund CNE’s employee pension program, which it estimates is currently underfunded by $100 million, as well as pay off the healthcare system’s liabilities.

“At the end of the day, their pension liabilities [would be] gone, all their debt [would be] gone,” through this acquisition,” Joshua Nemzoff, CEO of StoneBridge, told The Herald.

He has given CNE until March 25 to decide on StoneBridge’s offer, which includes expanding services not currently provided by Lifespan or CNE. He adds that he is also open to working with Brown University should CNE accept the deal. “We will be more than happy to talk to Brown University and see what kind of relationship we can have with them. But we were very open to anything that makes sense for the provision of quality care.”

In a statement Thursday, Raina Smith, a spokeswoman for Care New England, said it was too early to consider any sort of deal following the failure of the merger with Lifespan, according to The Providence Journal. “There are a number of viable paths forward that we are examining in the coming weeks."

Lynn Blaise, president of the United Nurses and Allied Professionals, said in a statement that Neronha’s rejection puts patient care in Rhode Island at risk of being plunged "further into the depths of for-profit healthcare" by opening up the potential for more out-of-state acquisition deals like the one offered by StoneBridge. “Our union has major concerns about this potential sale, and we urge Care New England and state leaders to ask the tough questions. Is StoneBridge, which was just created in 2020 and has never owned a single hospital, truly a “not-for-profit” or are they a for-profit masquerading as a not-for-profit?”

While a for-profit company, StoneBridge says it will complete the transaction as a nonprofit entity. It also plans to use its “unique partnership model to bring in an academic medical center as an affiliation partner in an effort to improve the quality of services being offered at Care New England and reduce the levels of outmigration to Boston and, to a lesser extent, New Haven.”

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