CNE reports $804K FY18 Q3 operational gain

PROVIDENCE – Care New England Health System reported operational income in its fiscal third quarter of $803,605, an improvement on an operational loss of $6.5 million in the same fiscal 2017 period. Excluding the continuing costs of the shutdown of Memorial Hospital of Rhode Island, CNE saw operational income of $4.6 million for the three-month period ended June 30. Total operational revenue and gains for the third quarter for the CNE group was $278.8 million, a 1.7 percent decline from a year earlier.

For the period the health care provider – which includes Butler Hospital, Kent Hospital, Women & Infants Hospital, 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 – showed an increase in unrestricted net assets of $159,039, compared with $2.2 million a year earlier (changes in unrestricted net assets include the effects of nonoperating activity, including gains or losses on investments and the like).

Through the first three quarters of fiscal 2018 Care New England posted an operational loss of $39.9 million, a slight improvement on the $46.4 million operational loss it recorded through the first nine months of fiscal 2017. Total operational revenue and gains for all three quarters was $828.5 million, a 0.5 percent year-over-year decline. Fiscal year to date CNE has posted a decrease in unrestricted net assets of $39.7 million, compared with a decline the previous year of $24.6 million.

“The financial information reported today continues to show that the focus, strategic planning and dedication of staff across CNE is making a significant impact,” said Dr. James E. Fanale, president and CEO. “We continue to make important strides in our clinical and academic partnership efforts and look forward to building off this positive momentum as we remain focused on quality, service and access.”

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Successful growth initiatives and cost management has been effective, the company noted in the quarterly report summary. Those initiatives include action plan tracking, daily productivity monitoring and revenue cycle improvements. Initiatives targeting growth, leakage, access, cost savings and patient retention are ongoing, the company said.

Butler, Kent and Women & Infants hospitals and the VNA of Care New England are all profitable from operations through the fiscal third quarter ended June 30, the company reported.

While Butler had posted a $3 million operating loss through the first three quarters of fiscal 2017, year to date in the current fiscal year the facility has posted a $744,518 operational gain. Similarly, Kent has gone from an operational loss in fiscal 2017 of $1.3 million to operational income through the first nine months of fiscal 2018 of $9.9 million. And Women & Infants has improved from a loss from operations of $10.4 million in fiscal 2017 year to date to operational income through the first nine months of fiscal 2018 of $5.9 million.

CNE management added more detail on operations excluding Memorial Hospital, which is designated the Obligated Group, noting that through fiscal 2018, the group has shown operational improvements every quarter, going from an operating loss of $8.7 million in the first quarter of fiscal 2018 to operating income of $4.4 million in the second fiscal quarter and income from operations of $4.6 million in the third fiscal quarter.

In its entirety, the Obligated Group has posted operational income of $350,202 through the first nine months of fiscal 2018, compared with an operation loss of $46.4 million during the same fiscal 2017 period.

On Aug. 9, Care New England and Partners HealthCare filed with the state for an expedited review of their proposed merger under the Hospital Conversion Act, citing a $40 million loss during the first two quarters of the fiscal year, mostly attributed to Memorial Hospital.

The biggest challenge to CNE’s financial performance aside from Memorial Hospital’s losses is patient volumes in the medical/surgical, obstetric, deliveries and the Neonatal Intensive Care Unit, according to the summary.

Inpatient volume at Kent was 90 cases lower in June compared with the average cases in January. Butler psychiatric admissions have declined 12.7 percent from budget and are 6.6 percent lower than in the previous year. While year-to-date medical surgical discharges for the system were ahead of budget by 2.4 percent, the count declined 1.2 percent in the last quarter. Inpatient and outpatient surgical procedures are both 1.4 percent lower than budgeted, and emergency room admissions are below budget by 2.8 percent.

“However, action plans are stabilizing and growing these patient activity trends as well as the alignment of staffing to the volume levels. The first three quarters have shown positive results in these areas,” the report reads.

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