and CEO of Roger Williams
Medical Center.
Name: Robert A. Urciuoli
Position: President and chief executive officer of Roger Williams Medical
Center, positions he has held for the last 13 years
Background: Hired as a budget director at Roger Williams Hospital 28 years
ago. Spent five years each as vice president of operations and chief operating
officer.
Education: Bacherlor’s degree in accounting from the University of Rhode Island, 1969.
Age: 53
Family: Married, three children
Residence: Providence
PBN: This year you reported net income of $93,467, compared to a loss last
year of $751,205. But typically this hospital has operated at profit.
URCIuoli: We’ve had a pretty good stretch. I think that we have become on of the
most efficient hospitals in the state of Rhode Island. If you look back over a
five or six year period and you looked at operating margins and compared Roger
Williams with its competitors, I think we rank number one in the state when it
comes to overall margins during that period of time. The problem unfortunately
is that ranking might have a margin over a five year basis at 1.8 percent. That’s
not nearly enough to run the kind of facility and provide the kind of care we
want to at Roger Williams. Yes, we’ve made money and we’ve been able to consistently
do it over a period of time, but it is not nearly enough to support the technology
needs that the hospital has.
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There seems to be no consistency when it comes to hospital finances in Rhode
Island. It’s the same industry, with the same product. How can there be such disparity?
I think there are a couple of reasons that may not also be attributable directly to the hospitals. I’ll go back maybe 15 to 20 years ago when the hospitals in Rhode Island were more regulated. One of the things that happened to the state, because we had these systems in place we were as a state a very low cost provider, compared to virtually everybody in the country. When the Medicare system changed our base was considerably lower than the rest of the country. We’ve been penalized for that.
Is the hospital being a low-cost provider, or is the state being a low-cost
provider?
Initially, my comments relate directly to the state of Rhode Island. HCAA did a report, maybe three or four years ago, that ranked Rhode Island number one in the country from the standpoint of efficiency. That, I think, for the state was a significant achievement. How that impacts the business community is because we were a low cost provider, meaning the entire state of Rhode Island, the premiums charged for health insurance were considerably lower than other parts of the country. In particular we were 35 to 40 percent lower than Massachusetts. That has changed a little bit in the last couple of years. We’re still lower than Massachusetts, but I don’t think we’re 35 to 40 percent lower anymore.
One of the problems we have in the state is we started with a base that was lower. Instead of being rewarded by the federal government and the insurance companies for being lower cost providers, they used our base to establish reimbursement. When the rest of the country was getting 5 and 6 percent increases they were getting it on a higher base. When cutbacks occurred as a result of BBA, (Balanced Budget Act) there was a lot more for them to remove from their budgets because they had a little bit more fat basically. In our case we were fairly lean. Therefore there wasn’t very much for us to cut.
A couple of years ago we were named by HCA Mercer as one of the top 100 hospitals in the country. If you looked at their benchmark criteria, they really looked at two things. They looked at quality as an indicator, number of benchmarks, and then they looked at our financials and using some formulas that were applied to all 5,600 hospitals nationally they determined that Roger Williams was a very cost efficient high quality hospital. We’re very efficient, very economical, increased volume, lower length of stay and at the end of the year we made $100,000 on over a $100 million worth of business. There’s something wrong with that equation. If this were a normal business and our business increased by 12 percent and we were low-cost efficient provider to start with you’d think our margins would go up. But in our business they don’t.
What about charitable care?
It’s a big part of the problem we have at Roger Williams and the state. Last year we provided about $6 million worth of free and uncompensated care, about 6 percent of our budget. One of the problems we have is Rhode Island is probably one of only four or five states that doesn’t have a state reimbursed uncompensated care mechanism or pool. So in Rhode Island, statewide we give over $100 million of uncompensated care that is not supported by the state, where in other states it is.
Those people who are paying for their coverage are really paying for that uncompensated
care?
In theory certainly there’s a piece of that, especially when years ago you could
do a little cost shifting. The reality now in Medicare is essentially fixed reimbursement.
If you come into the hospital as a Medicare patient, you’re all going to get the
same reimbursement. The reason Roger Williams is a little more successful than
some of the others is that we’re a little bit more efficient, we can get the patient
out a little quicker, we’re buying our supplies a little bit better than maybe
some of our competitors. That reimbursement is fixed. It doesn’t include any fixed
amount for uncompensated care. With the third parties where we also don’t get
reimbursed, where you could cost shift a little more, everybody shared a little
bit in the burden, but with Blue Cross and United right now, there’s precious
little that comes back to the hospital, therefore it drops to the bottom line.
For many years all we heard were hospitals had to merge to survive. Roger Williams
has made various attempts at affiliation, but still stands alone.
Like most institutions, especially going back seven or eight years ago, the
common feeling in the industry, with what we all saw as some of the impending
changes was in order to survive you had to become part of a bigger system. In
our case, we looked at those kinds of possibilities in the state of Rhode Island.
We thought we had a potentially good partner with Columbia HCA. The good news
for us was we were able to extract ourselves from that agreement once we found
that Columbia was having the problems that they have.
What’s happened was that the common theory that these mergers were going to be the salvation for hospitals, that hasn’t worked. If you start looking around the country you’ll see some of the bigger mergers starting to fall apart. And a lot of them quite frankly have not been successful. One of the things that has worked well for us, is we engaged a national consulting company, Price, Waterhouse, Coopers. We were still looking at mergers as recently as last year. Particularly we were looking at a merger with St. Joe’s. The good news is the consultants came in and told us they thought we’d be a better institution as a stand-alone institution, because in fact we were very efficient. There was a five or six-year trend, where our admissions were going up. During that period of time, on a cumulative basis, our admissions are up 25 percent compared to where we were four or five years ago and our market share has increased 30 percent over that same period of time.
We want to be the best little community teaching hospital we can.
You mentioned that some mergers are falling apart nationally. Lifespan has
lost VNA and Hospice. Is Lifespan falling apart?
It’s hard for me to say. In some respects I feel badly for Lifespan. Clearly, Rhode Island and Miriam were two very good institutions. I’m not convinced they made the best decisions for themselves. But if you look at where they are right now, they’ve added a considerable amount of overhead to their management and board structure. They have not been able to capitalize on their size and strength from the standpoint of being able to negotiate better contracts. For whatever the reasons, they have found themselves in a situation where their bottom lines have been atrocious and they’ve got issues with labor. If you said to me it’s going on, I wouldn’t be surprised, but I think that whatever happens there that’s not good doesn’t bode well for the state either.
I have always had the philosophy that collaboration is better in health care than competition. We’ve pretty much kept to that. The problem is that everything that we’ve seen nationally and everything we’ve seen statewide is built on a competitive model, which just is not working right now. I would hope going forward, whether it’s in our collective fight for cancer. In Roger Williams case, again becoming a designated cancer center. If we could work collaboratively with our sister institutions, including Lifespan in these matters. I believe in Centers of Excellence. I believe the state is small enough that we can do that.
As you know in the past I’ve been a proponent of a summit where we can design a system in the state that makes sense. I know that’s something that the Providence Business News particularly supported.
I am a believer that if the right people were sitting around the table and institutional egos were left outside the room, that Rhode Island is small enough to really design a first class health care system that can meet the needs of the public, take care of uncompensated care, provide good centers of excellence and provide an appropriate distribution of health care facilities in the state to meet the population needs.
Why haven’t we been able to put together that summit?
That’s a good question. I’m not sure I have the answer. I think part of it is inherent in the system. I’d rather be sitting with 12 of my colleagues, with insurance companies, and other professional, trying to design a system that would obviously include Roger Williams and some of its strengths, but with an overall goal of providing better care for the state.
