PROVIDENCE – Rhode Island’s two largest hospital systems, Lifespan Corp. and Care New England Health System, finished the quarter ending June 30 in the black, according to financial reports filed recently for bond investors.
Lifespan, Rhode Island’s largest hospital system, reported an operating income of $8.8 million for the three-month period, down from $10.8 million in income posted in the same quarter a year ago, but an improvement from the $3.7 million loss in the previous quarter.
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Meanwhile, Care New England reported an operating income of $2.9 million in the same three-month period ending June 30, down from $3.5 million in the quarter a year ago, but an increase from the $6.1 million the health system reported losing in the previous quarter.
Both hospital groups operate in fiscal years that begin on Oct. 1, so the three-month period ending June 30 is considered their third quarter.
They saw improvements in their net incomes in the third quarter, which includes gains and losses in areas that aren’t related to operations, such as investments, donations and pension costs.
Lifespan – which operates five hospitals, including the state’s largest, Rhode Island Hospital – reported $14.1 million in net income for the quarter, compared with a $49 million net loss for the same quarter a year ago. Care New England said its net income was $9.1 million for the quarter, up from last year’s $26 million net loss in the same period.
Lifespan’s total revenues were up to $797.2 million during the period, compared to $743.1 million last year. Revenues were boosted in part by a $64.1 million increase in patient service revenues but offset by a $21 million decrease in net assets released from restrictions for operations compared with last year.
At the same time, Lifespan reported a $56.2 million increase in expenses for the period compared with a year ago. These increases were primarily because of increases in the cost of supplies and other expenses of $30 million as well as a $25.3 million increase in compensation and benefits expenditures.
Lifespan saw strong returns on its board-designated investments, reporting $12.8 million in investment income and gains for the quarter compared with $59.5 million in investment losses a year ago.
Total assets decreased $92.7 million to $3.1 billion in the quarter compared with the same period in the previous year. Lifespan said this drop was driven in part by $21.8 in million deferred federal payroll tax payments as well as $20 million in sinking bond payments.
Other accrued expenses decreased significantly by $98.6 million from $107.5 million last year to $8.9 million. Lifespan said this was primarily because of the timing of last year’s Medicaid Disproportionate Share Hospital payment and license fee activity totaling $96.4 million, which was settled in the last quarter of 2022.
Lifespan’s accrued expenses also dropped by $98.6 million in the quarter compared with last year, this was driven by $96.4 DSH License Fee activity, which was settled in the fourth quarter of 2022.
The net income for Care New England, which owns Women & Infants, Kent and Butler hospitals, was $9.1 million for the quarter, compared to a $26 million net loss for the period last year. That performance was boosted by a $48.5 million increase in unrealized gains for the quarter compared with last year.
The health system’s revenues were up to $336 million during the quarter compared with $313 million last year. The boost in revenue was primarily because of a $21 million rise in net patient revenue.
Care New England’s expenses also grew to $333 million this quarter compared to $309 last year, this increase is attributed in part to a $4.8 million rise in salaries and wages as well as a $5.3 million increase in insurance expenditures compared to last year.
Overall, Care New England’s greatest financial challenge continues to be stabilization in the aftermath of the COVID-19 pandemic with lingering effects pandemic causing lower patient activity and revenue, as well as greater labor expenses and supply chain costs, according to its financial report.
Both hospital groups did not comment on the financial results on Friday. CNE executives updated investors on a quarterly call on Aug. 30. Lifespan will hold a similar presentation on Sept. 7.
