Can Anyone Save Care New England? Financial Situation Deteriorating As Losses Pile Up
GoLocalProv News Team
Can Anyone Save Care New England? Financial Situation Deteriorating As Losses Pile Up
The hospital group, which owns Women & Infants, Kent, and Butler hospitals, has been in and out of significant financial trouble for the better part of a decade and has tried what seems like an endless number of failed mergers.
On Wednesday, GoLocal first reported that Care New England's CEO James Fanale is stepping down.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTNow, the financial data shows the hospital group shows it is piling up more losses. And the group continues to struggle to sustain staffing and control staffing costs.
The group is now lobbying the General Assembly looking for bailout funds. But legislators are concerned that an appropriation to Care New England is just more good money after bad.
"Management is actively working with financial advisors, investment banks, the State of Rhode Island, Federal Government, and grant agencies to access all available resources to help fund ongoing operations during the COVID- 19 crisis," writes Care New England in its most recent financial report released in April.
The company became the national poster child of a failing healthcare system when national media came to visit.
In January of this year, The Washington Post chronicled the Care New England’s Kent Hospital's struggle to care for patients.
This is what a slow day looks like in a hospital emergency department overwhelmed by the coronavirus. On other days, healthcare workers have drawn blood from patients as they sat in their cars, set up intravenous drips in the packed waiting room or shunted patients to the overflow tent outside. There was simply no other choice, no other space — and far too few staff.
“Either I take care of someone in a car or I don’t get to take care of them at all. Either I take care of them in the waiting room, or they don’t get care at all,” said Laura Forman, director of Kent Hospital’s emergency department.
“Or they wait 10 hours for care. We have people wait 10 hours or 12 hours to be seen. And if you’re here for an emergency, that’s not tenable.”
What to know about the omicron variant of the coronavirus
The pandemic’s fifth surge is putting emergency departments under enormous stress. In March 2020, as the crisis began, doctors worried whether intensive care units would be able to handle the deluge of critically ill patients, whether they could scrounge up enough ventilators for all the people who would need them.
This time around, with a less deadly but vastly more contagious variant, the greatest damage is at the hospital system’s front door, where emergency rooms that turn away no one are trying to cope with an unprecedented tide of patients and too few staff to treat them.
“We are struggling, and at times failing, to take care of people who come through the door,” Forman said, “because of lack of staffing, because of lack of space, because of lack of resources.”
In the past 10 years alone, CNE has entered into negotiations with Southcoast Health System, Partners HealthCare (now rebranded Mass General Brigham) and Lifespan. The latter proved to be a failed effort.
“I recognize how critical healthcare is for the State and for every Rhode Islander. The COVID-19 pandemic has only further underscored the vital importance of affordable access to high-quality care for all. Put simply, if this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their healthcare costs go up, for health care that is lower in quality and harder to access,” said Neronha in announcing the lawsuit.
“Our review clearly established that Lifespan and CNE compete aggressively with each other across many inpatient and outpatient service lines. Eliminating this competition will have the same effects here as seen across the country following mergers of this size: rising healthcare costs, lower quality, and reduced access. The Parties simply have not demonstrated why these results would not happen here and how they would be able to deliver on promised benefits that would outweigh these risks," he added.
Care New England's Losses
The financial report states:
- Through the second quarter of FY 2022, the Health System reported $35.1 million loss from operations, $19.4 million unfavorable to the forecast. Net Non-Operating Losses of $9.6 million were unfavorable to the forecast by $17.0 million due to unfavorable variances in investment returns.
- Through the second quarter of FY 2022, total expenses for the Health System were $10.0 million or 1.6% higher than the forecast. The unfavorable variance is primarily due to the cost of travelers and agency nurse staffing, premium pay, length of stay increases, field hospital expenses, drug costs, other COVID-related expense impacts, consulting costs, and merger costs.
- The Health System's cash position is a primary focus of management. Overall days cash on hand were 48.3 days as of March 31, 2022, compared to 69.1 days as of September 30, 2021, and 78.7 days as of March 31, 2021. The decrease in cash through the second quarter of FY 2022 includes repayments of COVID-19 assistance and funding of the Health System's pension plans.
In December, GoLocal exclusively reported that Care New England has a new suitor.
According to the letter sent to the board of Care New England and secured by GoLocal, StoneBridge Healthcare is offering a financial package of $550 million comprised of a purchase price of $250 million and a $300 million investment in the hospital group.
The offer was made prior to the Lifespan and Care New England merger was blocked by the FTC and Neronha.
“It is critical for Rhode Island that Lifespan have viable competition. It is important for quality of care, for physicians and for Brown’s medical school," StoneBridge’s CEO Josh Nemzoff told GoLocal at the time of the offer.
Nemzoff founded StoneBridge in August of 2020, but he is one of the most experienced individuals in hospital acquisition and was part of the team that stabilized and sold Landmark Medical Center after its receivership.
“Rhode Islanders have so much at stake. Presently, care is suffering [at Care New England] and there are quality of care issues,” said Nemzoff.
He points to a range of issues. “The revenue side of Care New England is broken. The staffing costs are through the roof due to outside nursing agencies and their costs, especially during the pandemic,” said Nemzoff.
Sources tell GoLocal that other out-of-state hospital groups may also be entering the fray to make offers to acquire Care New England.