Lifespan: Charity care down by half thanks to Obamacare

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PROVIDENCE, R.I. (WPRI) – Rhode Island’s biggest hospital chain is already seeing a positive financial impact from President Obama’s health law, WPRI.com has learned.

Lifespan Corp., the nonprofit owner of Rhode Island Hospital and other facilities, recently revealed that its charity care costs plummeted by more than half for the quarter that ended Sept. 30, declining from $60.7 million in 2013 to $27.3 million in 2014. Its provision for bed debts declined from $30.7 million to $28.7 million.

The decline was “due largely to the January 1, 2014, expansion of Medicaid eligibility and the growth of health insurance exchanges, both of which reduced the number of uninsured patients,” Lifespan officials wrote in a disclosure to bondholders. Both policies were enacted as part of the president’s 2010 Affordable Care Act.

“No one expected that the Affordable Care Act would have such a significant impact on Medicaid enrollment in Rhode Island,” Lifespan spokeswoman Gail Leach Carvelli told WPRI.com.

The number of Rhode Islanders enrolled in Medicaid, the state-federal health insurance program for lower-income Americans, jumped from about 190,000 to more than 260,000 after the Obama law expanded eligibility at the start of last year. About 28,000 others signed up for private insurance through HealthSource RI, the new insurance marketplace the state created under the law.

Lifespan said its net revenue from patients rose to $402.5 million for the Sept. 30 quarter in 2014, up from $384 million in 2013, which it attributed “primarily” to the decline in uncompensated care. The hospital network is Rhode Island’s biggest private employer, with 13,635 employees at the close of 2013.

“This was obviously a welcome outcome,” Carvelli said. “This is especially significant since people now have coverage and can address health issues earlier, hopefully resulting in better outcomes and eventually lower overall costs.”

The reduction in uncompensated care helped Lifespan narrow its operating loss slightly during the Sept. 30 quarter to $11.3 million, down from $11.8 million in 2013, the disclosure showed. The nonprofit posted a net loss of $15.3 million for the quarter, compared with a net surplus of $20.4 million a year earlier. Its operating expenses rose 5% as 187 new jobs were added, primarily for physicians and IT professionals.

Carvelli cautioned that while the health law has had a positive financial impact on Lifespan so far, the hospital group still wracked up more than $75 million in uncompensated care costs during 2014.

“Our uncompensated care costs today are close to where they were in 2007, when we posted a better operating margin and we received more state support for our uncompensated care,” she said.

“With continued pressure on overall health care costs we are making major investments in enhancing our care delivery system, and in a new information technology system to position us to be a strong regional health care system and a vital component of our state’s economy,” she added.Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

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