PROVIDENCE, R.I. (WPRI) – Care New England, Rhode Island’s No. 2 hospital group, lost more than $6 million in October and November, but its incoming leader says the red ink was expected and largely attributable to the pending closure of Memorial Hospital.
“CNE’s financial performance for the first two months of the year is ahead of forecast,” Dr. James Fanale, who takes over Jan. 1 as Care New England’s CEO, wrote in an email to staff last week. “That said, CNE lost more than $6 million for the first two months of the fiscal year, most of it related to the closure of Memorial. The remainder of the system is close to break even.”
Care New England, whose other hospitals include Women & Infants, Kent and Butler, has been struggling financially for an extended period of time. Its operations lost about $115 million in the last two fiscal years.
Executives have cited dwindling activity at Memorial, which it acquired in 2013, as a key culprit. The company is now in the process of trying to close Memorial and sell the rest of the system to Partners HealthCare, the largest hospital group in Massachusetts. Partners has said it will decide on whether to go through with the deal by February.
Care New England is still waiting for state regulators to make a final decision on its application to close Memorial, which has already wound down much of its operations. Meantime, Fanale struck an upbeat note about what’s happening at its sister facilities.
“Volume continues to grow at Kent. This is a huge accomplishment,” he wrote. “Women & Infants has established a new program in plastic surgery. Butler and The Providence Center continue to work on developing a comprehensive ambulatory behavioral health program.”
Fanale also said executives from Partners toured the Care New England hospitals earlier this month. “Their visit went extremely well and I appreciate the hospitality you all displayed,” he wrote. “They were quite pleased with all that you do.”
The financial update comes as Fanale prepares to succeed Care New England’s outgoing CEO, Dennis Keefe, next week. In a farewell message to staff Tuesday, Keefe said he is “very confident in our future, as we all have worked very hard over the past two years to point us in the right direction.”
“We have greatly stabilized our finances and are nearing a breakeven run rate for all operating units except Memorial,” Keefe wrote. He said he was confident the plan for Memorial will succeed, and also expressed enthusiasm for the company’s Integra accountable-care organization. And he said he is “very confident” that its merger discussions “will result in a positive outcome.”
Care New England confirmed last week that up to 200 jobs at Memorial could remain in place once it gives up its hospital license, providing primary care and other services in Pawtucket. Fanale also noted that for others put out of work by Memorial’s closure, there are more than 1,500 jobs open across Care New England and the Lifespan and CharterCARE hospital groups.
Separately last week, Care New England said its board voted to “assume sponsorship” of Memorial’s underfunded pension plan, as well as to remove Memorial from the obligated group for its bond debt. Fanale said in a statement the moves “honor our commitments to employees and bondholders, leaving them in a more stable position than when we acquired Memorial.”Ted Nesi (firstname.lastname@example.org) 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