PROVIDENCE – A recently released report commissioned by the Rhode Island Foundation shows that Rhode Island hospitals have made progress on controlling spending but they still face several financial challenges.
The foundation said the report used publicly available data collected and analyzed by Manatt Health to get a better understanding of the financial performance and structure of the state’s hospital systems.
Rhode Island’s small-group and individual market premiums have consistently stayed lower than the average of other New England states from 2019 to 2022, according to the report. More specifically, at $571 per member per month in 2022 Rhode Island had the lowest individual market premiums among New England states and one of the lowest in the nation. Along with this, Rhode Island’s acute care hospitals have a higher proportion of Medicare and Medicaid payments, making up 74.2% of discharges, as compared with 67.6% in Massachusetts and 69.4% in Connecticut.
Overall, the report found Rhode Island Small Group private plans have higher actuarial values and offer “more generous benefits compared to its New England peers, while being less expensive.” But at the same time, Rhode Island had a 12% lower inpatient acute hospitalization utilization rate than Massachusetts and 5% lower than Connecticut, according to the report.
Zachary Nieder, senior strategic initiative officer for the Rhode Island Foundation, noted that outpatient utilization data across the three states was not publicly available.
Also, the report showed that in Rhode Island, the average standardized inpatient price per stay paid by private employer-sponsored plans was around 17% lower than Connecticut and Massachusetts in 2020. Along with this, the average outpatient price per service paid by private employer-sponsored plans in Rhode Island was around 29% lower than Connecticut and 7% lower than Massachusetts.
The report also showed health systems across all three states are struggling financially. Between fiscal years 2018 and 2022, Rhode Island’s statewide operating margin fell from negative 0.8% to negative 3.4%. During the same period, operating margins in Massachusetts fell from negative 0.2% to negative 4.5% and from negative 0.1% to negative 3.8% in Connecticut.
Throughout all three states, the average operating expenses rose faster than net patient service revenues during this period. In Rhode Island, operating expenses and adjusted discharges rose by 17%, while the net patient revenue rose just 9%. At 21%, Rhode Island saw the smallest increase in direct patient care labor costs per discharge between 2018 and 2022, compared with 34% in Massachusetts and 38% in Connecticut.
Nieder said the COVID-19 pandemic certainly affected hospitals’ financial performance during this period, but more information – in the form of regular financial reports– will be needed to understand whether the same challenges have persisted.
In terms of staffing, the report found that Rhode Island has more emergency physicians, nursing assistants and nurse practitioners per 100,000 residents than both Massachusetts and Connecticut. However, Rhode Island has the lowest number of licensed practical nurses, personal care and service workers, and physician assistants compared to Massachusetts and Connecticut. Also, Rhode Island has 122 primary care physicians per 100,000 residents, which is greater than Connecticut at 108 per 100,000 residents but lower than Massachusetts at 136 physicians per 100,000 residents.
Further, Rhode Island health care workers, aside from licensed practical nurses and nursing assistants, were paid less than health care workers in both Massachusetts and Connecticut in 2022.
While the health care workforce was not the primary focus of the study, Nieder says the data reflects discussions and reinforces the need for ongoing efforts in both the private and public sectors to build a more stable health care workforce.
The foundation noted that the report intentionally doesn’t offer policy recommendations but emphasizes that the goal was to help inform discussions among policymakers and advocates.
“This overall effort reinforces the need for policy discussion to be based on [a] solid foundation of data that key stakeholders can agree on, even if they may then disagree on diagnosing what solutions might be needed or not needed,” Nieder said in an email to Providence Business News.
The Hospital Association of Rhode Island acknowledged the study as a tool for policymakers to become more educated on issues that the states' hospitals are facing.
”The Hospital Association of Rhode Island thanks the Rhode Island Foundation for working with hospitals to base the conversation around the state’s health care system in factual information and comparisons across the region,” said HARI President Teresa Paiva Weed. “Although the study refrains from providing recommendations, its findings validate the concerns that HARI and its member hospitals have consistently voiced regarding the financial difficulties inherent in operating within a regionalized health care economy.”
Rich Salit, a spokesperson for Blue Cross & Blue Shield of Rhode Island, which helped fund the study, said the report confirms that reimbursement from private insurers is aligned with neighboring states based on Medicare reimbursement because it adjusts for differences in costs of living. Also, with 70% of services reimbursed by Medicare or Medicaid in Rhode Island, he said the report highlights the need to increase Medicaid reimbursement rates.
Salit said the report analyzes less than half of health care spending in Rhode Island, so it’s important to use the same analysis for the other half of the state’s health care spending, including physician services and pharmacy costs.
“This will help us understand where our health care dollars are being spent and develop policies that achieve our shared goals of ensuring that health care, especially primary care, remains accessible and affordable and that we continue to improve quality and health equity,” Salit said.
Other major players in Rhode Island's health care system that contributed to funding the study included Lifespan Corp., Care New England Health System and South County Health.
(UPDATE adds paragraphs 17-19 with comment from Blue Cross & Blue Shield of Rhode Island spokesperson Rich Salit.)
Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.
