Rhode Island’s hospital industry suffered its worst operating loss in recent memory last quarter, according to an industry-association survey.
The operating loss of $23 million for the three months ended Dec. 31 is the worst that Edward J. Quinlan can remember in his eight years as president of the Hospital Association of Rhode Island, which conducts a survey of its 12 member hospitals each month.
“One quarter does not a year make, but there are deep concerns that there are atypical forces at work here that could affect our financial profile for the year,” Quinlan said.
Your Business Has Gone Global. Has Your Insurance?
A decade ago, “doing business internationally” was mostly a large-company concern. Today, a manufacturer in…
Learn More
There appears to be multiple factors driving the losses. One reason might have been that there were fewer sick people: the number of admissions was down slightly from a year earlier, as was the number of emergency room visits. One possible reason: a milder than usual flu season, which Quinlan attributed to the state’s strong immunization program.
“As the state has said, there was no severe influenza epidemic this year, and hospitals plan and budget based on admissions,” said Otis Brown, a spokesman for St. Joseph Health Services of Rhode Island, which includes Our Lady of Fatima Hospital in North Providence and Saint Joseph Hospital in Providence.
“If those admissions don’t materialize, we still have fixed costs,” Brown said. He said Fatima was close to its budget in the first quarter, but January and February were even slower. Brown mentioned higher labor and energy costs and an “unimaginable” jump in malpractice premiums as key cost pressures.
A slight reduction in Medicare reimbursement payments to hospitals that took effect Oct. 1, the beginning of the quarter, might have crimped statewide revenues slightly. Most hospitals also have home-care programs, which also saw Medicare payments cut. Congress last year went ahead with the cut despite intense lobbying from the hospital industry.
Fewer admissions and the Medicare-payment cuts come against a backdrop of rising costs and stagnant revenues that has been plaguing the hospital industry for the last few years. Pharmacy costs, the cost of providing health insurance to thousands of employees, and ballooning labor expenses – an outgrowth of a severe work force shortage in several key areas – all are taking their toll.
Meanwhile, hospital administrators complain that revenues remain stagnant.
“The twin forces of inadequate reimbursement and rising costs, the hospitals’ abilities to alter either of those dynamics is very limited,” Quinlan said.
Last year the state’s hospital industry lost an estimated $3.2 million, vs. a $21.5 million loss in 2001. The association attributed the improvement to a stronger operating result from Rhode Island Hospital.
For the complete current issue, visit our subscription Web site, or call (401) 273-2201, ext. 227 or 234.
