New year’s resolutions take on a whole new meaning for Rhode Island’s
health care industry, where problems and proposals now pending could be
memories by the millennium.
At the top of the list are negotiations between Providence’s Women &
Infants Hospital and the union representing more than 1,100 nursing,
technical, clerical, maintenance and service employees there. On the day
before Christmas, as strikers marched outside the facility for the third
day in a row, it was anyone’s guess how the matter would be resolved:
would management meet union members’ demands for job security? Or would
what started as one-day strike evolve into something similar to the 1988
strike that lasted 25 days?
Union fears stem from a proposal by the hospital’s parent company, Care
New England, to merge with Lifespan health care network. The deal –
which must pass state and federal regulatory muster – is intended as a
cost-saving measure driven by a managed-care-style delivery system.
Hospital executives have vowed to do what they can to preserve jobs in
the face of lesser reimbursements from insurers.
This also could be the year Rhode Island gets its first major for-profit
hospital. Tenet Healthcare Corp. of California is in the process of
buying the Landmark Medical Center in Woonsocket for $325 million. The
purchase, like the Lifespan/Care New England merger, is subject to an
extensive review by the state’s new attorney general, Sheldon
Whitehouse, and the Rhode Island Department of Health.
The changes in the industry stand to effect more than health care
workers, as Rhode Island hospitals have a major economic impact on their
communities. A 1996 study by the Howell Group of Boston showed that one
of every $7 of economic activity in the state has a direct or indirect
link to the hospital industry.
In recent years, the state’s hospitals have experienced steady growth in
revenues and expenses, with receivables and bad debt also increasing,
according to a recent report by the Hospital Association of Rhode Island
(HARI). In 1997, overall hospital revenues were $1.49 billion, compared
to operating expenses of $1.46 billion, the report said.
Net patient receivables increased more than 50 percent between 1993 and
1997. Meanwhile, uncompensated care exceeded 6 percent of operating
revenues in 1997. In all, hospitals provided more than $92 million worth
of free care, the report said. That number included patients who met
federal poverty guidelines for charity care and those who did not, but
could not or would not pay for services.
Those and other factors have contributed to a worrisome slide. Operating
margins that were slightly positive in 1993 turned negative in 1994,
increased to 2.5 percent in 1996 and dropped to 1.31 percent in 1997,
the report said.
Several factors – including a drastic reduction in Medicare payments
under the Federal Balanced Budget Act of 1997 – are expected to further
erode those margins. In 1998, expenses actually exceeded revenues,
according to Howard Dulude, HARI’s vice president of finance. While
audited numbers were not available, the association estimates an
operating loss of 2.5 percent, Dulude said.
With so many factors threatening the industry’s fiscal health,
“individuals hospitals are saying, as it gets tighter and tighter, we’ve
got to look at ways to avoid duplication. If that means affiliations,
mergers, acquisitions, whatever it might be, each hospital has to look
at how to best protect themselves going into the future,” said Edward
Quinlan, HARI’s president and chief executive officer.
While some would conclude that the independent hospital will become
obsolete, Quinlan isn’t convinced.
“Some hospitals may conclude that they can go alone. Others are
convinced that they cannot. So each hospital has its own set of unique
characteristics that contribute to the decisions they’re making,”
Quinlan said. “Each case is different. It’s hard to generalize.”
