The news last month that Rhode Island hospitals would get another $15 million in Medicare reimbursement from new amendments to the 1997 Balanced Budget Act was a high point in a year in which hospitals saw continued financial instability.
It was a year of severe health care labor shortages — most notably nurses — continued dire straits for nursing homes and home health care agencies, and the failure of Lifespan and Care New England to merge into one hospital network.
Finances, said Edward J. Quinlan, president of the Hospital Association of Rhode Island, are clearly the dominant forces behind most of these problems.
It even tops labor strife, which might perceptually seem like a huge problem in 2000 after the state’s largest hospital, Rhode Island Hospital, barely settled two huge disputes with nurses and Teamsters over issues such as mandatory overtime.
But there were also hospitals such as Rehab, Westerly and Landmark Medical Center that successfully negotiated contracts last year, Quinlan said, adding that labor issues are merely a byproduct of difficulties hospitals continue to face in getting adequately reimbursed for their costs.
In October, the state Department of Health released a report comparing hospital costs in Rhode Island to those nationally, and found that in 1998 Rhode Island had the 10th highest hospital expenses per-capita and ranked 37th highest in its hospital reimbursement per discharge.
The report also showed Rhode Island received in aggregate 7 percent less than the national rate per adjusted discharge and the lowest reimbursement rate in New England, while it had the 10th highest per-capita expense ($1,293).
In December the American Hospital Association released a report that showed more than 32 percent of hospitals lost money in 1999, compared with 26.6 percent the previous year.
At the same time, Modern Healthcare Magazine, which released the AHA data, ranked Rhode Island’s hospital profit margins “as the lowest in the nation,” Quinlan said.
Two-thirds of the state’s hospitals lost money last year, Quinlan said, a total of more than $50 million for fiscal year 2000, which ended September 30.
But relief on the public payer side is coming from the new BBA amendment, which includes at least $11 billion for the nation’s hospitals over the next five years, $15 million of that coming to Rhode Island.
Hospitals in Rhode Island have recorded operating losses of more than $150 million since the BBA was enacted three years ago, Quinlan said. The new law also comes on top of a BBA amendment last year that restored $25 million to hospitals in Rhode Island.
But on the private payer side, things remain sticky, Quinlan said. With only two major private insurers, contractually Rhode Island’s is “not a level playing field.”
Their only hope in 2001 is “a better recognition of our costs” on the part of insurers, Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England, which “may not be in their best business interests” but would certainly help consumers, Quinlan said.
No ‘new Lifespan’
Although the idea was there’d be strength in numbers, the proposed merger of Lifespan and Care New England officially failed in September, ending what had been an almost two-year application process that included more than a year of review by the Attorney General under the state’s Hospital Conversions Act.
First announced in 1998, the proposed merger would have created a $1.4 billion in-state, eight-hospital network with more than a 63 percent market share. The new network would have joined Lifespan’s Rhode Island, Newport, Bradley and Miriam Hospitals in Rhode Island and New England Medical Center in Boston and Care New England’s Kent, Women & Infants and Butler hospitals.
In ending merger plans, both Care New England CEO John J. Hynes and Lifespan CEO George Vecchione promised that the two networks would continue to seek ways to collaborate on the use of resources short of a merger.
Last month, while announcing that Lifespan partners VNA of Rhode Island and Hospice Care of Rhode Island would leave the network, Vecchione said the organization was still working out ways to fulfill the promise to work with Care New England.
Also in 2000, the lead paint issue came and went without any resolution as Sen. Thomas Izzo’s “Act Relating to Lead Hazard Control and Mitigation” never got to a full General Assembly vote. The bill would have eliminated the current “innocent owner” statute and ultimately lower financial risks for property owners who properly maintain their buildings, but it faced stiff opposition from insurers, Realtors and builders.
Other health care newsmakers last year were major cuts by Butler Hospital in its outpatient services and continued problems enticing young people to enter health care fields.
With the nursing shortage, Quinlan said many hospitals in Rhode Island have been “unable to fill budgeted positions” and thus don’t have the capability to open more inpatient beds should the need arise.
