Providence, Rhode Island-based Lifespan Health System has finalized terms for a rebrand to Brown University Health as it expands upon its 55-year affiliation with the Ivy League.
As part of the arrangement announced Thursday, Brown University has committed to a seven-year, $150 million investment into the nonprofit health system. The money will be used to improve the health system’s infrastructure and recruitment, as well as to fend off the rising cost of care delivery.
“These agreements establish a deeper and important relationship [between] Brown and Lifespan so that we can collaborate more on clinical care, medical education, population health and very importantly research,” John Fernandez, president and CEO of Lifespan, said during a Thursday morning event announcing the agreement. “This is a timely and critical step in our history.”
Lifespan is Rhode Island’s largest health system and employer with five hospitals and about 16,000 employees. Three of those hospitals are academic teaching hospitals with ties to the university, most notably Rhode Island Hospital’s designation as the principal teaching hospital for Brown’s Warren Alpert Medical School.
The boards of both organizations had voted to advance talks on the tighter affiliation last fall. That was about a year and a half after a planned merger between Lifespan and the state’s second-largest health system, Care New England, was headed off by the Federal Trade Commission.
Lifespan and Brown specified that their new arrangement is not a merger and both entities will remain “separate and independent.” Separate reviews conducted by the organizations—including “fruitful discussions with the Attorney General—confirmed the deal does not require any regulatory or legislative approvals, they said.
Still, the agreement will create new ex officio spots on Lifespan’s board of directors for Brown’s president and the dean of its medical school. The latter will also be appointed as Lifespan’s chief academic officer.
The new terms also tighten the academic ties between Lifespan hospitals and the medical school. The Warren Alpert Medical School will be the “exclusive” medical school affiliate of Lifespan, which will house 11 of its clinical departments—though the system may still have affiliations with other educational institutions for clinical programs that aren’t offered at Brown.
The planned investments from Brown to Lifespan will begin July 1, 2024, and total between $15 million and $25 million annually. After the 7-year period, Lifespan has agreed to invest $15 million annually into the medical school “to support research and medical education,” the organizations said.
In their announcements, Brown and Lifespan said that the investments will fund strategic initiatives around expanding the health system’s Epic electronic health system, population health programs focused on eliminating health disparities, physician recruitment and “state-of-the-art” clinical training and biomedical research facilities.
The deal will also help support Lifespan’s long-term financial well-being at a time when many health systems are feeling the squeeze, Fernandez added.
“We are taking these actions now because there are a lot of headwinds in healthcare, whether that be inflation, labor shortages, low reimbursement rates—I could go on for days, but I won’t,” the executive said at the announcement event.
Lifespan reported just over $3.1 billion in revenue during its 2023 fiscal year, ended Sept. 30, 2023. Its operating income for that year was a narrow $8.6 million, an improvement over fiscal 2022’s $56 million operating loss. Brown University’s endowment and other managed assets totaled $6.6 billion as of June 30, 2023, which was a $75 million net increase over the prior fiscal year.
Alongside the agreement’s other financial terms, the Brown Investment Office will begin managing about $600 million to $800 million of Lifespan’s investment portfolio, which the university said will create “the capacity for increased returns to support Lifespan’s mission.” The handover will be spread over a four-year period.
As for the rebrand to Brown University Health, the pair haven’t announced a concrete date for the switchover but expect it to land before the end of the year. Though the full effort will take “several years to complete,” the organizations say that the change will bolster recruitment and “reflect the ability to provide medical care of international caliber to Rhode Islanders.”
“The new agreements move the relationship between Brown and Lifespan to a more contemporary model in line with other affiliation agreements we see across the country, where the academic-medical affiliation is reflected through a shared name between the hospital system and the academic institution,” Brown University President Christina Paxson said in a release.