Federal aid helps Lifespan offset some of $43M operating loss in April

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PROVIDENCE, R.I. (WPRI) — Rhode Island’s biggest hospital group suffered a second month of substantial losses in April amid the coronavirus pandemic, but this time Congress helped stanch some of the bleeding.

Lifespan disclosed Wednesday that its operations lost $43 million during the month of April, on the heels of a $33 million operating loss in March. That’s more than three times as much red ink in just two months as the nonprofit corporation had lost during its entire 2019 fiscal year.

Lifespan owns Rhode Island, Miriam, Newport and Bradley hospitals and is Rhode Island’s largest private employer, with more than 15,000 people on its payroll at last check.

The biggest culprit: a plunge in patient revenue as hospital providers stopped non-emergency surgeries and other procedures to prepare for a potential wave of COVID-19 patients. Lifespan said inpatient discharges were down 39% in April, while inpatient days were down 25% and total volume was off 31%. (Expenses were also lower, down roughly $10 million from last April.)

However, much of the April operating loss was offset by an infusion of $36.6 million in new federal grants provided through the CARES Act, the massive relief bill that passed Congress in March. According to the U.S. Department of Health and Human Services, Rhode Island Hospital received nearly $20 million because it was one of 395 hospitals nationwide that had provided inpatient care to at least 100 COVID-19 patients as of April 10.

The extra money from Washington — combined with a snapback on Wall Street that bolstered investment earnings — left Lifespan with nearly $5 million in net income for April.

But while he called the CARES Act funding “helpful,” Lifespan President and CEO Dr. Timothy Babineau emphasized that the $36.6 million “does not cover the cost of one month’s operating losses.”

“As our patient census slowly increases to more normal levels in the months to come, we hope to see a return to our pre-COVID improving financial performance,” Babineau said in a statement. “However, it is quite clear that additional federal and state financial assistance will be absolutely necessary for us to continue to provide the vital health care services upon which the state relies during this prolonged recovery period.”

Another provision of the CARES Act, known as the Coronavirus Relief Fund, steered $1.25 billion to Rhode Island that state leaders can use to address costs associated with COVID-19. Gov. Gina Raimondo has said she plans to allocate a portion of that money to the state’s hospitals to help stabilize their finances amid the crisis.

While the governor has not outlined exactly how she thinks that should work, last week members of her administration offered a look at their emerging plan, dubbed the Hospital Assistance Partnership Program, during a Senate Finance Committee hearing.

According to a presentation by the R.I. Department of Administration, the first phase of the Hospital Assistance Partnership Program would steer between $130 million and $150 million to Rhode Island’s hospitals by mid-June out of the $1.25 billion pot of Coronavirus Relief Fund money.

The presentation says the cash would be distributed proportionally “based on hospitals’ lost revenue and additional COVID-19 expenses, less total direct CARES Act grant funding received; conditional on acknowledgement of program goals and commitment to take action and progress.”

A second phase of the Hospital Assistance Partnership Program is also being contemplated, but the committee presentation offered no details on how that round of funding would work.

In his statement, Babineau thanked state and federal leaders for “helping ensure that we can continue to provide quality care in Rhode Island.”

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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