PROVIDENCE, R.I. (WPRI) – Care New England, Rhode Island’s No. 2 hospital group, has suffered an operating loss of $40 million so far this fiscal year as two of its hospitals, Women & Infants and Memorial, continue to drown in red ink.
Care New England’s operations lost $26 million from Jan. 1 to March 31, after an operating loss of $13.9 million during the previous quarter, according to the hospital group’s latest financial statements. The company had expected to lose less than $5 million over those six months, making the results eight times worse than budgeted.
Care New England’s biggest problems are flagship Women & Infants, which posted an operating loss of $14.1 million for the six-month period, and Pawtucket’s long-struggling Memorial, where the operating loss was $11.9 million. The company has also incurred nearly $6 million in restructuring costs. Net patient revenue was nearly 9% below forecast across the system.
The dismal financial results follow Care New England’s recent announcement that it has reached deals to merge with Partners HealthCare, Massachusetts’ biggest hospital group, while selling Memorial to Prime Healthcare, owner of Landmark Medical Center. The company also laid off an undisclosed number of workers late last month, many at Women & Infants.
“Today’s quarterly financial report further highlights the significant challenges we continue to address at Care New England,” spokesman James Beardsworth told Eyewitness News. “Every effort is being made to right our ship but with that comes careful and painful decisions, most recently impacting our dedicated and hard-working staff.”
The $26-million operating loss for the winter quarter, Beardsworth said, “further tells the story we have been very candid about – decreases in patient volume, a worsening payer mix, changing health care needs of the population, and extremely restrictive reimbursement caps in place through the state health insurance commissioner’s office.”
The payer mix refers to what share of hospital bills are paid for by different commercial and government insurers. In Care New England’s case, more of its revenue is coming from Medicaid, the state-federal insurance program for low-income people, and Neighborhood Health Plan; it says both pay less than Blue Cross & Blue Shield. The hospital group’s management attribute the shift to the Obama health law, which President Trump is now seeking to overhaul.
Beardsworth also noted that, “from a public health perspective, there are fewer sick and premature infants, which is great news, but under our current payment model it represents a significant financial challenge.” Women & Infants derives significant revenue from babies who enter its neonatal intensive care unit (NICU), and the hospital said NICU discharges are 11% below forecast so far this fiscal year.
While Women & Infants and Memorial are particular concerns for Care New England, none of its other facilities are operating in the black so far this fiscal year, either. Operating losses total $3.2 million at Butler, $1.4 million at Kent, $1.5 million at The Providence Center, $1.1 million at its Integra accountable-care organization, and $1 million at its Visiting Nurse Association.
“While we continue to make important progress, it takes time for such results to ultimately be seen on the bottom line,” Beardsworth said. “We are very confident through our ongoing and diligent efforts, along with exciting new partnership opportunities for the system, that we will continue to move forward focused on providing the best possible care for our patients and community.”
Care New England CEO Dennis Keefe has said he hopes to sign definitive agreements with both Partners and Prime by the summer. State regulators then would need to sign off on both transactions for them to go through.Ted Nesi (email@example.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook