CNE sees fiscal year operating loss narrow to $14M

PROVIDENCE – Care New England Health System says its fiscal year operating loss narrowed in 2023 to $14.2 million, a significant improvement over the system’s $58.6 operating loss the prior year, according to a financial report filed Nov. 30.

The state’s second-largest health system attributed the gains to operational improvements that boosted quality, access and financial performance across its operating units, but noted financial challenges related to the pandemic remain.

“The pandemic and its lingering aftermath effects have placed severe financial stress on CNE, including lower patient activity and revenue, higher labor related expenses and higher supply chain costs,” according to the health system. “Management has developed and is continuing to develop action plans with the intent to stabilize these trends; action plan performance versus plan through the fourth quarter of FY2023 was ahead of forecast. These action plans are addressing the goals of quality, access and service.”

The improvements boosted fourth-quarter performance, with the health system recording a $2.8 million operating income gain for the quarter ending Sept 30. This marks a slight decrease from the previous quarter’s operating income of $2.9 million but shows a notable improvement over the same period last year, when the health system reported a $26.9 million loss in the fourth quarter of 2022.

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The hospital system operates in a fiscal year that begins on Oct. 30, meaning the three-month period ending Sept. 30 is considered the fourth quarter.

Care New England, which owns Women & Infants, Kent and Butler hospitals, reported a $5 million net loss for the quarter, an improvement from the $40.5 million net loss reported in the fourth quarter 2022 but down from the previous quarter’s profit of $9.1 million. This decline in net income from the previous quarter was primarily driven by a $7.84 million net nonoperating loss.

CNE also reported $335 million in operating revenue for the quarter, which was offset by $332.9 million in operating expenses. Care New England’s net patient service revenue has continued to climb and was $24.8 million higher, including $1.1 million in stimulus funding this quarter, compared to the fourth quarter 2022, according to the report.

Expenses for salaries and wages also rose to $157.3 million for the quarter, an $8.8 million increase over the previous quarter and $8.6 million greater than the same period last year. The system’s expenses on fringe benefits increased $3.3 million over the same period last year because of health insurance and was partially offset by a decline in defined benefit plan pension costs, according to the report. Medical supplies and drugs were also $3.5 million lower this quarter compared to the same period last year because of volume related to specialty pharmacy costs. 

For fiscal 2023, Care New England’s expenses were $13.5 million lower than the previous year. This is thanks to reduced staffing costs, including overtime, incentives and severance costs, according to the report. 

The health system also received $2.18 million in relief funds this year, including $545,627 in the fourth quarter. This marks a $13.6 million decline from the same period last year, when Care New England received $14.1 million in relief funds.

The quarterly gains were largely due to cost management initiatives, including action plan implementation, productivity monitoring and revenue cycle improvements, according to the report. The system also implemented more than 70 actions plans during the fiscal year, including growing surgical services programs, revenue enhancements, expansion of clinical services, improvements to length of stay and premium pay, as well as supply chain savings.

A spokesperson for Care New England could not be immediately reached for comment on the financial report.

Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.