Brown/Prospect plan to buy CNE labeled 'loss'

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Rhode Islanders would be the losers if Brown University and Prospect Medical Holdings based in California were to acquire Care New England Health System, says the man who ran Kent Hospital for the past five years.

In an interview Saturday, Dr. Michael Dacey, suggested the timing of a letter released Jan. 11 from Brown University President Christina Paxson was designed to throw off Care New England’s acquisition talks with Boston-based Partners HealthCare. Dacey disputes Paxson’s claim that, if the Partner’s deal were to be reached, Rhode Island would suffer.

To the contrary, he says the state would lose with Paxson’s plan.

In a letter released last week to the Brown community, Paxson writes that the vision of an integrated academic health system for the state is at risk if the Partners/Care New England plan is followed.

“I feel strongly that letting this acquisition go forward would be wrong for Rhode Island and for Brown,” she writes. “Doing so is likely to lead to specialty healthcare shifting to Massachusetts, impeding access to healthcare for Rhode Islanders and especially for members of the state’s underserved communities. It also would likely increase the cost of care and reduce the ability of Rhode Islanders – consumers, businesses, healthcare workers and policy-makers – to have a voice in how our healthcare system works.”

Paxson’s letter came as a surprise to Dacey, who was intimately involved in discussions on the future of Care New England and worked on the acquisition plan with Partners. The two have agreed to extend a letter of intent until the end of this month. The acquisition would require regularly approvals by the state.

A Warwick native, Dacey spent 17 years at Kent starting off as director of the Intensive Care Unit and, after a series of administrative roles, served as the hospital’s president and chief operating officer. He left Kent to assume the newly created position of Executive Vice President of Riverside Healthcare System, which is slightly larger than CNE, based in Newport News, Va.

Dacey thinks the timing of Paxson’s proposal is “not accidental,” designed to be disruptive and “is poorly thought out.”

“What would the community get?” he asks. “It’s not keeping patients in Rhode Island and the money would go to California.”

He also questioned if Paxson is aware of CNE’s commitment to assume the $72 million unfunded liability pension of Pawtucket’s Memorial Hospital.

In response, Tom Reardon, President of Prospect East, in a statement Monday said, “We would discuss the pension and other obligations with Care New England at the appropriate time.”

He went on to say,

Kent Hospital has a good reputation for quality of care. We believe our Rhode Island solution makes the most sense. In collaboration with Brown, we want to create an integrated health system in Rhode Island that is dedicated to providing high-quality, affordable healthcare; encourages skilled medical professionals to stay in the region; and spurs research and discovery that improves health and leads to more economic development in Rhode Island. The quality of care at Kent Hospital will be enhanced as a result of this transaction.

Jack Callaci, director of collective bargaining and organizing for the United Nurses and Allied Professionals, is not surprised Prospect is involved since they have expressed an interest in CNE. What he can’t fathom is why Brown would partner with Prospect. That was a surprise to him.

“Why would Brown want to get involved with an agreement like that? They’re taking their good reputation and tying it to a wagon or entity with a terrible reputation,” he said.

So, what’s the play?

“Prospect wanted to get Care New England and didn’t,” he said. He believes the Prospect strategy is to “spook Partners” and should the CNE/Partners deal move forward to get Brown to oppose it. Further, he sees it as a maneuver to gain political support to kill the CNE/Partners deal.

Under the plan outlined by Paxson:

l Brown University or a non-profit subsidiary of Brown would acquire CNE’s Women & Infants Hospital of Rhode Island.

l Prospect Medical would acquire CNE’s Kent Hospital and non-hospital assets, such as The Providence Center community mental health organization.

l Either Brown or Prospect would acquire CNE’s Butler Hospital (with Brown having the right to decide).

l Medical school faculty at Women & Infants, Butler and Kent would either be invited to join a Brown faculty practice plan or to become Brown employees.

l The majority of any operating margins received by Brown would be reinvested in clinical care, medical research and education.

l Brown and Prospect would offer CNE a Letter of Intent and enter into a period of expedited due diligence at CNE’s earliest convenience.

“If the focal point of Rhode Island healthcare shifts to Boston, excellent physicians (many of them Brown-trained) could be less likely to choose Rhode Island as a place to practice. In addition, the full economic benefits of a strong local academic health system — one that brings in federal grants, generates spin-off companies and creates new jobs in Rhode Island – would be lost, perhaps forever,” Paxson writes.

CNE’s official response, coming shortly after the release of Paxson’s letter and conference call with the news media on Thursday was: “Today’s announcement by Prospect Medical Holdings and Brown University represents their intention to acquire and split up the Care New England Health System – a process undertaken of their own independent action and interests. While we appreciate their interest in the future of health care in Rhode Island, we will move forward with the important process we have set upon in the best interest of both CNE and those we care for. To that end, CNE will proceed in our exclusive discussion with Partners as set forth in our letter of intent and we look forward to the next steps in that process.

Asked what he thought of the Brown/Prospect plan, Mayor Scott Avedisian pointed out that, as a for-profit company, Prospect would pay property taxes if it acquired Kent.

“But the most important piece is that Kent would continue to operate in the quality manner it has, and the addition of Brown Medical School residents will undoubtedly assist Kent,” he said in a text message.

He went on to say it’s too early to endorse the plan, but nonetheless, “I am very excited about the future of this proposal.”

Under its current relationship with Brigham and Women’s, a Partners entity, Dacey said not only are Rhode Islanders staying at Kent, but patients from out of state are coming here. Dacey called Partners “the finest health care organization in the world.”

“The mayor makes a good point,” Dacey said of the tax issue. He feels that could be addressed with a payment in lieu of taxes.

But his primary concern is what a Prospect versus a Partners acquisition would mean for patients.

“One [Partners] is an A plus. Compare the quality scores. The best thing is if the Partners [acquisition] goes through,” he said.

Callaci agrees.

“Their [Prospect] word is no good and they have shown it is no good,” he said.

He said when Prospect acquired CharterCARE they promised to keep Elmhurst Nursing Home that was part of the package, but instead, “they flipped it.” He also pointed out that the union has filed an unfair labor practice in an effort to obtain sanitation records of medical equipment at Our Lady of Fatima Hospital.

Readon responded, “We are committed to maintaining high standards of quality care and patient safety at our hospitals. In recent years, we have made significant investments designed to enhance quality of care at our facilities. We have also invested heavily in building a strong support structure in clinical quality and compliance at the corporate and regional levels of our company to help our hospitals, physicians, nurses and other caregivers meet our rigorous expectations in those areas.”

As for the allegations about conditions at Fatima, Readon said, “CharterCARE conducts regular internal audits as part of its routine quality assurance efforts. There are no issues with patient safety, as has been validated by the RI Department of Health.”

Callaci also warned of expectations of tax revenues, pointing to what happened when Landmark Medical Center was acquired by Prime, also a for-profit operation. Prime created a non-profit to own the center and then charged it high fees to operate it that Callaci labeled “a paper shuffle” to avoid paying taxes.

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