After losing a combined $56.6 million in fiscal years 2000 and 2001, Lifespan, Rhode Island’s largest health system, cut its net loss to $6.8 million in 2002.
What’s more, Lifespan squeezed out a gain of $1.6 million on its operations during fiscal 2002, which ended Sept. 30, according to its recently released annual report. The operating gain was Lifespan’s first since the mid-1990’s. (The net loss in 2002 stems from investment losses, officials said.)
But the glossy annual report Lifespan issued last month to board members, hospital trustees, regulatory agencies and local libraries is a sanitized version of its fiscal 2002 performance. It excludes the financial impact of New England Medical Center, which Lifespan dropped from its network in December 2002.
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Even though NEMC was a Lifespan affiliate for the entirety of its 2002 fiscal year, Lifespan’s annual report makes no mention of the Boston hospital. No asterisk accompanies the report’s financial figures to indicate that NEMC is omitted.
The 2002 audited financials that Lifespan filed with the Rhode Island Department of Health – which includes NEMC – shows that Lifespan lost $19.7 million, with an operating loss of $10.9 million.
Lifespan spokeswoman Jane Bruno said that because the annual report was being issued many months after Lifespan’s disaffiliation with NEMC, officials decided it was better to leave it out of the report.
“The annual report came out just about a year after the disaffiliation was announced and eight months after it was completed,” she said. “Given the lag time, we felt like it would be more valuable for the Rhode Island marketplace to only include the Rhode Island affiliates,” she said.
Either way, the state’s largest health system appears on the road to financial recovery. If NEMC’s financials were cut out of the 2001 results, Lifespan still would have shown a loss from operations of $18.2 million vs. the $1.6 million operating gain it posted in 2002 without the Boston hospital.
In short: Lifespan’s operating performance improved by nearly $20 million in fiscal 2002, putting it on sound financial footing for the first time since the mid-1990s.
Even so, Lifespan President and Chief Executive Officer George Vecchione, who took over in September 1998, says there is more to do. He would like to see the nonprofit health system begin to post small, consistent margins to help pay for capital improvements at its affiliate institutions: Rhode Island, Miriam, Newport and Bradley hospitals.
“We’ve achieved break-even, and that’s nice, but we need the ability to make the proper investments to make sure that Rhode Island has outstanding health care into the future,” Vecchione said in an interview last week.
Increased volume last year aided the system’s financial performance, a trend Vecchione says has continued during fiscal 2003. And better bill collection through new contract-management software has enabled Lifespan to capture revenue that might have gone uncollected in the past.
He also attributes the turnaround in part to the continued progress of the administration at the individual hospitals. In 2000, Vecchione appointed Dr. Joseph Amaral to lead Rhode Island Hospital and Dr. Kathleen Hittner as the president of Miriam.
For example, he credits Amaral and his administration for “changing the environment” at the 5,800-employee hospital, which recently inked a three-year contract with its nurses’ union after a relatively smooth round of collective bargaining.
Vecchione added that major construction projects at all of Lifespan’s hospitals are on schedule and on budget, with the exception of a new $25 million surgical suite at Miriam Hospital. That project has been sidetracked by a Providence City Council-imposed construction moratorium, which Lifespan is fighting in court.
Rhode Island Hospital should complete its $40 million emergency department – the largest capital project in its history – by early 2005. And a phase of the hospital’s new $13.5 million cancer center in its Ambulatory Patient Care building is slated for completion next spring, Vecchione said.
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