$130 million from CARES Act puts Lifespan finances back on track

Business News

PROVIDENCE, R.I. (WPRI) — Just five months after executives warned of a dire financial outlook, Rhode Island’s top hospital group says a gusher of federal money has stabilized its balance sheet despite huge disruptions from the pandemic.

Lifespan’s chief financial officer, Mamie Wakefield, told bondholders on Monday that the group’s hospitals have received $130 million in federal aid so far from the CARES Act, the $2-trillion-plus relief measure that Congress hurriedly passed back in March. She said that amount has offset roughly the entire drop in revenue Lifespan experienced during the spring quarter.

“That’s very positive,” Wakefield said.

Among Rhode Island’s hospital groups, Lifespan benefited disproportionately from the CARES Act because much of the aid was tied directly to COVID-19 admissions, and Lifespan hospitals treated an estimated 80% to 85% of the state’s coronavirus patients. Lifespan owns Rhode Island, Miriam, Newport and Bradley hospitals, and back in April its CEO warned of major potential financial issues.

Wakefield said, “I had heard through my peers that hospitals that were filled with COVID patients actually did better than the hospitals that were not filled with patients but were just sort of empty. And that seemed to be true for us. So we seem to have weathered the pandemic pretty well.”

It’s been a different story at Care New England, the state’s No. 2 hospital group, which owns Women & Infants, Kent and Butler. Its chief executive, Dr. James Fanale, told 12 News last week that because the CARES Act distribution formulas have been weighted toward hospitals which had large numbers of coronavirus patients, there’s been less for specialty hospitals such as Women & Infants and Butler.

“This is going to be a tough year for us, because of the direct and indirect impact of COVID,” Fanale said. “We are still fighting long and hard with the [congressional] delegation and the state to come up with a little more stimulus. … It keeps me up at night, but we’ve got good people.”

The four members of Rhode Island’s congressional delegation, all Democrats, supported the CARES Act but have also raised questions about the formulas being used to distribute funds.

“We set this funding aside in the CARES Act to help local hospitals and providers who are struggling with the fallout of this pandemic, but the Trump administration’s distribution has been slow and uneven,” U.S. Sen. Jack Reed, one of the Senate Democrat negotiators on the CARES Act, said in July. He added that “more needs to be done to help offset their COVID-19 related losses.”

Going forward, Wakefield said Lifespan executives are “cautiously optimistic” about the coming months, noting that the flu season has been muted in the southern hemisphere due to the precautions being taken to tamp down the spread of coronavirus, and that there are still two temporary hospitals set up in Rhode Island should they be needed.

Lifespan is Rhode Island’s largest employer, with over 16,000 workers at last check.

Meanwhile, just last week Lifespan and Care New England announced their boards had voted unanimously to make another attempt at merging into one dominant Rhode Island academic medical center. Wakefield said consultants at Alvarez & Marsal have suggested a definitive agreement could be hammered out over the next 120 days, though she called that an “aggressive” timeline.

Ted Nesi (tnesi@wpri.com) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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