PROVIDENCE – Lifespan Corp. on Wednesday reported a $23 million operating loss for fiscal 2019, following a $30.9 million profit the previous year, and plans a voluntary early-retirement program.
Without investment income, Lifespan said, its loss for fiscal 2019, which ended Sept. 30, would have hit $55 million.
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The health system attributed the poor results to a cut of nearly $25 million to Medicare rates, increased demand at its two major hospitals after the closure of Memorial Hospital last year and fewer patients with private insurance.
“We have identified the factors that led to the losses, have set a goal of generating a positive outcome of $1 million in operational income [for fiscal 2020] and have begun the process of achieving it,” Lifespan CEO and President Dr. Timothy J. Babineau said.
For the fourth-quarter, Lifespan posted a $5.7 million net loss that includes $745,000 from operating income. That compares to $1.1 million in net income in the same quarter last year, when the company reported a $3 million profit just from operating income.
Babineau also pointed to what he said is a steady flow of Rhode Island patients who head to Boston for specialty medical care.
“I hear weekly from my physician colleagues about specific cases that they used to care for in Rhode Island that they know are being steered up to Boston,” Babineau said, suggesting that rival health system Care New England’s affiliation and near-acquisition by Massachusetts-based Partners Healthcare and its Brigham and Women’s Hospital may be driving some out of state.
He added that the network is working with a consulting firm on restructuring efforts and will institute the voluntary early retirement plan for some employees in March.
Babineau said any layoffs would likely not include caregivers, and come as a last resort.
“If that’s required to get us back on our feet financially, we will consider it if we need to,” he said. “I find it very unlikely if we have to have any reductions they would be at the bedside.”
Lifespan, the state’s largest health system and employer, includes Rhode Island Hospital, The Miriam Hospital, Bradley Hospital, Newport Hospital and various other entities, including Lifespan Physician Group.
Rhode Island Hospital posted the steepest drop at the end of fiscal 2019 with an operating loss of $31.9 million. At year’s end in fiscal 2018, the hospital reported a $13.9 million gain.
This year’s losses were due to a high number patients on Medicare, which now pays lower reimbursement rates, overflow from Memorial Hospital and resulting overtime for providers, Lifespan said.
“When we have a demand greater than what we have anticipated, the only way we can meet that demand is to ask our employees to work overtime, or bring in contract labor,” said Mamie Wakefield, Lifespan’s chief financial officer. “The amount of labor we paid for at Rhode Island Hospital last year was astronomical.”
By contrast, The Miriam Hospital ended fiscal 2019 with $13 million in operating income, down from $17.7 million in 2018.
Bradley Hospital ended fiscal 2019 with a $2.3 million gain, an increase from the $2 million in operating income it reported in 2018.
Newport Health Care Corp., which includes Newport Hospital, ended fiscal 2019 with a $9.5 million operating loss, slightly more than its $8.4 million loss in fiscal 2018.
Lifespan Home Medical posted a loss as well of $710,000 as compared to its $143,000 loss from fiscal 2018.
Gateway Healthcare continued post losses, with a $5.1 million operating loss in fiscal 2019 after a $5.4 million loss the previous fiscal year.
Lifespan Physician Group and Lifespan School solutions both posted gains, ending fiscal 2019 with $223,000 and $168,000, respectively.
Elizabeth Graham is a PBN staff writer. Email her at Graham@PBN.com.
This article has been corrected to accurately reflect operating losses of Lifespan Home Medical and Gateway Healthcare.
