Name: George A. Vecchione
Position: president, Lifespan, a health care system that includes: Rhode Island Hospital, Hasbro Children’s Hospital, The Miriam Hospital, Bradley Hospital, VNA of Rhode Island, Hospice Care of Rhode Island, Newport Hospital, and New England Medical Center in Boston and its Floating Hospital for Children.
Background: Executive vice president, The New York and Presbyterian Health Care System, 1997; executive vice president and director of The New York Hospital, 1988; president and chief executive officer, the New Rochelle Medical Center, 1976; associate director of finance, Mount Sinai Medical Center, 1970; accounting firm of Haskins and Sells, 1967.
Education: Master’s degree, health care management systems, Rensselaer Polytechnic Institute in Troy, N.Y.; undergraduate degree in accounting, St. Francis College in Brooklyn.
Family: Married, two grown children
Residence: Warwick
GEORGE A. VECCHIONE: ‘Health care is going through a level of change I have not experienced in my 30 plus years of service in health care.’
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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PBN: You have been on the job for a little more than a year. How would you assess your first year?
VECCHIONE: Let me go back a little bit in terms of expectations. This market in many respects is very similar to what I’ve experienced before and in certain respects it’s also very different. In Rhode Island you have a very good set of providers in terms of quality of care. In fact, let me say quite clearly that the quality of care provided in Rhode Island is quite high. And I think that Rhode Islanders should feel very good about that. What had been the practice, 20, 25 years ago, when Rhode Islanders needed specialty services they would leave Rhode Island and go to other places, principally Boston, and less frequently to New Haven (Conn.) and New York. Because of the presence of high-quality services that have been developed and enhanced over the past number of years, there are more people coming into Rhode Island for specialty services today than leave Rhode Island. That speaks to the quality of the service, the fact that it’s accessible, local, more convenient. And it also happens to be cost-effective. There’s no question that health care in general is going through a level of change that I have not experienced in my 30-plus years of service in health care. It’s quite extraordinary. I expected that the care would be quite good, it has met or exceeded my expectations, that’s one observation. Number two, the extent that we are in fact functioning within a regional marketplace is more clear at this point.
So generally it’s a positive development that out of state residents are coming to Rhode Island to receive special services?
It enables those services to be not only maintained but enhanced. It enables us to make continued investment in those services. And it also allows us to maximize jobs in the state of Rhode Island.
What are some of the specialty services that they’re coming for?
Cardiac services. Both Rhode Island Hospital and Miriam Hospital have well-earned, excellent reputations in that area.
What have your biggest challenges been?
My observation is that, from a financing perspective, that in Rhode Island, the managed care premiums have been somewhat artificially depressed, and that’s especially true when you compare it not only to national norms but surrounding states like Connecticut and Massachusetts. The premiums charged for family or individual coverage are well below what you’ll find in the adjacent states. That creates pressure on the payers to try to hold on to as much as they can and to pay the providers as little as possible. So what you find in the state of Rhode Island is the fact that the three major payers have lost money. And I think you’re finding out in the community larger than average premium increases sought from employers. So that’s been part of the fiscal challenge in the state of Rhode Island. Of course the hospitals and agencies like home care agencies here in Rhode Island are facing the same problems that others are around the country with respect to the reduction in Medicare revenue (because) of the 1997 Balanced Budget Act. And that has a different impact on each site. But the profile that typically absorbs the biggest hit would be an urban teaching hospital that serves a large uncompensated population, and perhaps an organization that runs a home health agency – that’s what Lifespan has principally in the state of Rhode Island. So the reductions for us are somewhat disproportionate.
How much money does Lifespan spend on care for people who cannot afford to pay?
In terms of cost, if you just looked at the hospital services without the physician services, we provide about $35 million in uncompensated care at cost. And as you know, Rhode Island is one of the few states in the country that does not have a public hospital system and in fact we are the provider of last resort.
How does the amount of uncompensated care provided in Rhode Island compare with that of other parts of the country, and how does providing uncompensated care affect Lifespan?
It’s absolutely part of our charitable mission, we are a not-for-profit, and part of our mission is to provide care to those who need our services, regardless of the ability to pay. And that’s something that we don’t shy away from. When you go through a period of time where employment is high but the number of part-time employees is rising, or the trend in industry has been toward health plans – where they’re offered – that rely on higher deductibles and co-pays, there’s an increased chance that the provider, the hospital, will end up with a write off at some point in time. That’s a function of the economy in which we’re functioning. As a state Rhode Island has a lower incidence of medical indigents than the average for the country. So as a state Rhode Island fares fairly (well) in that comparison. Within the state of Rhode Island the medical indigent rates vary from location to location, with South Providence being quite high and Newport being quite high.
Could you talk about the difference between a nonprofit health provider and a for-profit provider in terms of staffing levels and quality of care?
The difference is really in the mission. The mission for the not-for-profit, as I mentioned, is to provide needed care regardless of the ability to pay; the mission of the for-profit organization is to make a profit. I think that you’ll find more and more that for-profits, from a qualitative perspective, will provide care on a comparable level. The issue is whether they can make a profit doing that. If they can’t, I believe they would prefer to leave the market and move on to another place where they can. It’s just a difference in terms of mission. These hospitals in Lifespan have been around for a very long period of time, and we’re not leaving. So I think in terms of durability and reliability the public should at least understand that the difference is one of mission, and we’re not moving on to greener pastures simply because we’re not able to break even.
An example of that would be the recent decision of United HealthCare to exit the Medicare risk market for Aquidneck Island. And it’s very understandable, and it’s not a negative statement, it’s just a fact that their mission is to make a profit, and the mission for our group is to provide services.
Can you see a light at the end of the tunnel for Lifespan’s financial problems?
The deficits at Lifespan have moderated a bit in this fiscal year, obviously we haven’t finished the year so I don’t know the year-end numbers, but it appears that the loss will be reduced from last year. And the budget for the year 2000, as was recently approved by the board, calls for a further reduction in the shortfall next year. If you notice in the press of late the indications are that losses are accelerating in certain markets, especially up in the Boston market, so we’re not experiencing that trend. We haven’t solved the entire problem but it does appear to me that that we’re on the road to recovery.
What do you think Lifespan’s role should be in Massachusetts? Should there be further expansion?
As a more general response to the role of Lifespan, I very much believe that Lifespan exists for the benefit of its partners, and that all partners within Lifespan need to derive benefit from being part of it. What we need to do is facilitate for each of the members a way for them to derive benefits, and a way for us in a coordinated fashion to provide a
better health care product for the citizens of Rhode Island. Now, how do we do that? We do that partly by doing things on a joint basis so we gain the advantage of scale. But we also do that by pooling capital investments for things such as information services and information systems, so that at the end of the day we end up with a relatively seamless system of care, so that if a patient is registered at a site within the system, they only need to register once. And if they had X-rays done in their doctor’s office a week earlier, those results will be available to the practitioner regardless of the point of entry. You end up with a better product, certainly from a user perspective it’s more user friendly, and I think that’s one of the major purposes of having a health care system.
Having New England Medical Center, which is the third oldest hospital in the country, as a member of Lifespan is a plus. NEMC, as you may have read in the Boston papers, has undergone a very dramatic turnaround over the last two years that they have been members within Lifespan; they’re now at or approaching break-even, their volume is moving upwards, they are reopening beds, adding staff. It’s a very positive situation up in Boston. And part of that relates to items facilitated by Lifespan, but part of it relates to the fact that that hospital has always been a very physician-friendly institution, known for its high-quality services.
Having NEMC in the system adds value as we function on a regional basis, that we’re not just constrained by geographic boundaries.
Will you add more hospitals in Massachusetts?
There are opportunities in Massachusetts, but the purpose of even considering an addition would not be to add size. It would be to add strategic value in terms of the objective of improving overall patient care. So if an opportunity presents itself either with a hospital, a grouping of hospitals, or even physicians, that would be seriously considered.
How specifically will the proposed merger of Lifespan with Care New England affect patient care?
I think the merger offers an excellent opportunity to enhance patient care, especially in the high-end specialized services. Again, by improving the coordination between Lifespan and Care New England, when you look at the respective make up of the two systems, you’ll notice that Care New England has the impressive services of Women & Infants Hospital, which is not just something that is of value to Rhode Islanders. You look at Lifespan, we have not duplicated that set of services (offered by Women & Infants) but we have the other surgical high-end cardiac services. And the fact is that we provide services to an expanded region. When you pull the two together, and do so in a coordinated fashion, you’re beginning to deal with the whole patient, the whole family, the need of a larger geography, and that’s where the main advantage derives. It would be a Rhode Island- based system, with control within the state of Rhode Island, which is a significant item. When you look at the fact that – let’s just look at the payer side of the equation – you have United HealthCare, which is based out of Minnesota, you have Harvard Pilgrim, which is a Massachusetts-based organization, which has recently decided to consider divesting itself of its Rhode Island operations, then you have Blue Cross which up until recently was considering an arrangement with an out of state organization, it is important that – especially when you come to something as personal as health – you have Rhode Islanders in the position of decision making.
We have met with a number of community groups that are interested in this proposed transaction, and their feeling is that increased diversity at the board levels would be a positive thing. That message has been heard and is being considered.
How do you propose to add diversity to the boards?
It’s being considered by the board at this point. There are a variety of ways that they might achieve that objective. What we’re trying to do is make sure that the community interests are first and foremost, and that the expertise related to a given topic that exists in the community is brought to bear on this specific topic.
When will the board make a decision?
I would think over the next four to six weeks.
Are you confident the merger will be approved?
I’m very confident at this point. I don’t want to overstate it nor understate it. I think that the reason for the merger is compelling in terms of support for academic medicine, and by the presence and extension of specialty services in Rhode Island, the jobs that are created by the presence of these services in the state of Rhode Island, and the fact that we are very much competing in a regional marketplace, and there are some very well-formed, well-financed, high-quality systems from out of state that might view Rhode Island as a market opportunity. So if we stay in neutral, and they’re not in neutral, Rhode Island loses at the end of the day. We need to have a proactive, positive response. This is a Rhode Island response, Rhode Island controlled, Rhode Island based, and one that’s focused on quality of service.
What effect will it have on the Rhode Island marketplace in general, particularly hospitals such as Roger Williams which is not part of a hospital network?
I think to the extent that we are successful in drawing more business into the state of Rhode Island (it is) the best and most positive way to ensure on a local basis that the other providers will have a place and continue to provide the services. There is not, in my opinion, enough health care business generated only by the population of Rhode Island to keep in place all of these current providers.
Does Rhode Island have the appropriate number of hospitals, or could it do with fewer?
There are many ways to look at that. There had been one rule of thumb that you needed one hospital for each 100,000 lives. If you look at Rhode Island in that way, you’ll conclude that we have too many hospitals. The problem is that these hospitals are, outside of the Providence area, somewhat diverse and distributed. And (in) their communities, their presence is very important.
