Care New England Continues to Struggle — Pension and Cash Are Serious Challenges
GoLocalProv News Team
Care New England Continues to Struggle — Pension and Cash Are Serious Challenges
According to documents filed by CNE, the group continues to overspend its budget even after closing Memorial Hospital, “Total expenses for the System were over budget by $10.2 million or 3.4 percent and $23.4 million higher than last year.”
Presently, Care New England continues to negotiate exclusively with Boston-based Partners HealthCare. The sale to Partners has been widely criticized by Rhode Island leaders — especially Brown University President Christina Paxson who has warned that the deal will adversely impact Rhode Island’s healthcare structure and jobs in Rhode Island.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTPaxson wrote in a letter to the Brown community in January, "I feel strongly that letting this acquisition go forward would be wrong for Rhode Island and for Brown. Doing so is likely to lead to specialty healthcare shifting to Massachusetts, impeding access to healthcare for Rhode Islanders and especially for members of the state’s underserved communities."
Paxson has proposed an alternative deal to CNE. Brown has partnered with Prospect of California in an effort to retain control of CNE in Rhode Island. Prospect owns and operates Roger Williams and Fatima Hospitals in Rhode Island.
Governor Gina Raimondo, Speaker Nick Mattiello and Commerce Secretary Stefan Pryor -- all appearing on GoLocal LIVE -- in the past few weeks have raised concerns about the CNE-Partners deal and potential job loss in Rhode Island.
Deeper Financial Problems
The overspending is just one of the problems facing Care New England and raises more questions about the management and viability of CNE.
According to CNE financial documents, “The System’s cash remains a primary focus of management; overall days cash on hand were 43 days."
In contrast, hospital groups with strong bond ratings have more than one-year of cash on hand. “Standard & Poors Global Ratings has outstanding ratings on 156 health systems of which 142 are included in the median ratios…AA+ rating..Days cash on hand: 426.2 days,” writes Beckers Hospital Review.
The lack of cash on hand is putting tremendous pressure on CNE’s management and is not improving despite the closure of Memorial Hospital.
Pension Shortfall
According to CNE financials, the pension fund is underfunded by over $100 million. The fund did realize substantial gains which mirrored the performance of the stock-market.
For FY 2018, even after shedding Memorial, key indicators show that CNE's budgeting and financial performance are flawed, “Inpatient volume for the System (excluding Memorial) through the first quarter was overall unfavorable to the budget…”
More Staff Cuts and Cost Controls
Beyond the layoffs at Memorial -- over 600 employees, overall salaries and wages were reduced. Full-time employees across CNE’s other hospitals were also reduced — Butler, Kent, and Women and Infants all saw cost reductions.
7 Implications and Unintended Consequences of a Care New England and Partners Merger
Providence does not usually do well in mergers
Remember Providence Gas, Fleet Bank, and Narragansett Electric?
Big employers, deep community involvement, and significant charitable donors — all were consumed and in each case, the number of employees left in Rhode Island by the succeeding company is a fraction of the once independent venture.
To the victor goes the spoils.
As if the Boston economy isn't good enough, and the Providence economy couldn't be more stagnant
The cityscape of Boston is littered with cranes. Boston Business Journal maps the construction projects utilizing cranes in Boston (see image) and the number of projects is staggering.
In Providence, there few construction projects and not a crane to be seen. The last thing Providence needs is for another one of its largest employers to be merged into a Boston mega-organization. The likelihood is that jobs will be lost or consolidated to Boston - basic functions like purchasing, accounting, etc. will be lost.
Harvard beats Brown in Ivy League match-up
Harvard Medical School is ranked as the #1 research-based institution in America by U.S. News and World Report.
Partners Healthcare’s academic partner is Harvard.
In contrast, Care New England’s academic affiliation is with the Warren Alpert Medical School of Brown University. Brown’s best ranking is 21st for primary care - and is ranked for research way back at #31.
One of the biggest losers in the merger could be Brown's medical school.
Care New England is RI’s 2nd largest employer, so what will It be in 2 Years?
According to the RI Department of Labor and Training, Care New England is Rhode Island’s second largest employer.
Lifespan is the largest: 12,050
Care New England: 8,500
CVS: 7,800
Cities like "Meds and Eds" (the medical and educational business segments), but Providence and all of Rhode Island is likely to lose high paid, highly educated jobs as a result of this deal.
Care New England Continues to Struggle
Despite hopes that closing Memorial Hospital would solve the financially beleaguered Care New England's economic woes, new financial documents unveil that CNE continues to struggle.
Additionally, the pursuer - Partners HealthCare - is also making cuts. The Boston Globe unveiled the Partners is cutting about 100 of the company’s tech workers that their jobs were being outsourced to India to cut costs.
“Many of the employees have worked for Partners for several years, or even decades, and are struggling with the company’s decision. Almost all are coders — people who scour patients’ medical records to pinpoint billable services — and earn upward of $40 an hour. Coders in India earn a fraction of that amount, making overseas coding an attractive way for hospitals to cut costs,” wrote the Boston Globe.
Can the unions battle?
Within hours of GoLocal breaking the news of the merger, the United Nurses and Allied Professionals (UNAP) President Linda McDonald, RN, released the following statement today:
"This proposed merger has the ability to impact thousands of jobs and the quality of care in Rhode Island and should be thoroughly scrutinized. Like most Rhode Islanders, we only recently learned of this proposal but expect Care New England and Partners HealthCare to be transparent in their process and begin a conversation with our union about the effect any deal would have on our members and our patients.
Memorial Hospital provides critical care to scores of Blackstone Valley residents every year and preserving its status as a fully-functioning community hospital will be among our top priorities as this process continues to unfold.
The onus is now on Care New England, Partners HealthCare and Prime Healthcare Services to make the details of this proposal public and to do it quickly so that workers, patients and state regulators may begin asking the appropriate questions."
The nurses represents nearly 1,400 registered nurses, CNAs, ER techs, surgical techs, orderlies, endo techs, environmental employees and ancillary staff at Kent and Memorial hospitals. But, will they have any impact on the decisions?
Speaking of Lifespan - will they be forced to merge with a Boston partner?
Lifespan is having its financial challenges too. While Care New England lost $53 million last year, Lifespan's losses were $40 million. The Lifespan losses were smaller proportionately to the healthcare group's overall budget and it does not have the cash crunch that Care New England was battling.
In February, Lifespan announced it had has entered into another Boston Hospital agreement. This agreement with Dana-Farber Cancer Institute is a long term agreement with the goal of advancing cancer treatment and research. Lifespan previously entered into an agreement with New England Medical Center and that deal led to years of protracted litigation to unwind. Lifespan also ran into a legal battle with Tufts Medical Center.
Will Partners' potential arrival in the market force Lifespan to affiliate?
