CNE reports $26.9M loss in fiscal ’18

CARE NEW ENGLAND reported a $26.9 million loss in fiscal 2018, much of it associated with closing Memorial Hospital.
CARE NEW ENGLAND reported a $26.9 million loss in fiscal 2018, much of it associated with closing Memorial Hospital.

PROVIDENCE – Care New England Health System reported an operating loss of $26.9 million in fiscal 2018 on Thursday, an improvement on its fiscal 2017 operating loss of $47.1 million.

Revenue for the health care system, which includes Butler, Kent and Women & Infants Hospitals, Integra Community Care Network, Southeastern Healthcare System, The Providence Center and VNA of Care New England, along with related entities and the remaining obligations of Memorial Hospital, totaled $1.13 billion, nearly identical to its revenue total for the 12 months that ended Sept. 30, 2017.

Excluding an operating loss of $33.5 million in fiscal 2018 for the shuttered Memorial Hospital of Rhode Island in Pawtucket, the health care system, known as Care New England’s Obligated Group, posted an operating gain of $6.6 million. All told CNE took charges in fiscal 2018 of $29.7 million directly related to the closing of Memorial (the financial report noted that in fiscal 2017 CNE took restructuring costs related to Memorial Hospital of $2 million, before the system announced it was closing the facility).

The total bottom line for Care New England, that is after non-operating gains and losses, and other changes in unrestricted net assets, showed that the system had a loss in net unrestricted net assets for the year of $7 million, although the report noted that Memorial sustained a decrease in unrestricted net assets of $97.9 million, while the Obligated Group saw an increase in unrestricted net assets of $90.9 million.

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Care New England’s three hospitals made significant financial improvements in fiscal 2018. Butler Hospital reversed an operating loss in fiscal 2017 of $2.8 million, turning it into an operating profit of $49,968. Women & Infants Hospital also reversed an operating loss into a profit, going from a loss of $4.6 million to a gain of $15.2 million. Kent Hospital as well went from a fiscal 2017 operating loss ($3.8 million) to a fiscal 2018 operating gain of $9.2 million, according to the report.

The VNA of Care New England showed a $755,838 operating profit. The company’s other medical groups, meanwhile, posted losses. Southeastern Healthcare System Inc., and affiliates showed an $8.4 million operating loss; Integra posted an operating loss of  $2.2 million; and The Providence Center had an operating loss of $3.4 million.

“The year-end FY 2018 results represent a significant improvement in performance over the previous year,” said Dr. James E. Fanale, president and CEO of Care New England.

Care New England’s overall inpatient volume was 1.6 percent less than budgeted, but ahead of the prior year by 0.4 percent. The under-performance was attributable to psychiatry volume, which was 13.1 percent below the budgeted amount. Medical/surgical discharges were above the budgeted amount by 2.4 percent. The increase in volume was attributable to Kent Hospital, indicating that initiatives to increase volume there are working, according to the report.

Discharges for the obstetrics services were above budget by 1.5 percent. Deliveries were above budget by 1.3 percent, and above the prior year by 0.2 percent. Neonatal Intensive Care Unit volume at Women & Infants was 5.7 percent greater than budgeted.

“Our constant focus on targeting growth, action plan tracking, cost savings and patient retention is clearly yielding the type of results we would expect,” Fanale said. “While we are pleased, we must remain focused on further improvement and moving forward our planned acquisition by Partners HealthCare. These results should not belie the fact CNE still has a weak balance sheet and needs a partner to help support critical capital investments.”

CNE and Partners HealthCare of Massachusetts signed a definitive agreement to merge in May.

Rob Borkowski is a PBN staff writer. He can be reached at Borkowski@PBN.com.