Care New England Faces More Changes - Already Cut Work Force from 8,500 to 6,500

Care New England Faces More Changes - Already Cut Work Force from 8,500 to 6,500

Care New England’s (CNE) board recently voted to hire national reorganization firm Alvarez and Marsal (A&M). Depending on who you ask, you get a different explanation of why A&M was tapped and what the impact will be. Make no mistake about it -  A&M is often known as a workout firm that restructures and leaves “blood in the water.”

It is hard to believe there can be much more job slashing. The healthcare conglomerate has already slashed jobs from 8,500 to 6,500, according to CNE sources. CNE was Rhode Island’s second largest private employer — Lifespan is the largest. The reduction of 2,000 at CNE is more than the total number of new jobs created in Rhode Island in the past four months.

As GoLocal first reported in April, Care New England entered into an agreement with Boston-based mega-healthcare group Partners HealthCare to join the system. Partners’ annual budget is nearly one-third larger than the State of Rhode Island’s budget. “Partners total operating revenue increased $794 million (7%) to $12.5 billion in fiscal 2016,” reported the company.

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Next for CNE, More Slashing or Reorganization?

While rumors swirl about the future of CNE, Jim Beardsworth, spokesperson for CNE, tells GoLocal that the company is making progress. “We are making some positive traction and as a result of our effort our financial situation is improving," said Beardsworth. 

As reported in May, CNE lost over $40 million in the previous six month period.

The newly engaged consulting group A&M's buzz phrase is, “Control your operating costs and deliver value."

"Healthcare reform, Medicare and Medicaid funding cuts, fluctuating third-party reimbursement rates ― you’re being pressured to remain competitive and succeed like never before. We are committed to changing the business of healthcare," says A&M.

And, many believe that Partners has instructed CNE to make the harshest cuts prior its acquisition of CNE, but Beardsworth says the management team and A&M are working to hone the business. He also warned that the challenges CNE faces are facing all healthcare groups today. “It is happening across the country and across the street,” said Beardsworth, in thinly veiled reference to Lifespan. 

But, there are few healthcare groups in the region are performing well and facing financial challenges. Lifespan has been up and down — losing over $30 million for a sixth month period and then bouncing back to report an $8 million for the past six months. The best financially performing healthcare group has been CharterCare — the own a number of facilities including Roger Williams and the for-profit group has been profitable.

CNE’s Previous Merger Partner Faces Financial Woes, Too

Boston Business Journal (BBJ) reports that Southcoast Health is also facing some significant financial challenges. CNE and South Coast had agreed to merge, but that deal collapsed in October.

At the time GoLocal reported,

"Care New England and Southcoast share a vision of creating a healthier community through community-based care," said Charles Reppucci, Chair of the Care New England Board of Directors. "We believe both organizations will continue in their unrelenting pursuit of this goal. Yet, for Care New England, we now believe the full extent of our mission as teaching, research and clinical organizations will be better served through today's decision.  We wish all of our colleagues at Southcoast continued success in their commitment to excellence and to community."

But despite the kind words, the financial wheels were starting to fly off of both healthcare groups. The dire situation of CNE and struggles of CNE have been unveiled over the past few months.

"Southcoast Health blamed an operating loss in the first half of fiscal 2017 that's double what it experienced last year largely on lower federal reimbursements and a math error caused by Partners HealthCare,” writes BBJ.

Southcoast operates four hospitals in southeastern Massachusetts and competes directly with RI hospitals for market share. Southcoast's losses more than doubled from the previous year’s $9.8 million to “a $19.3 million operating loss on $480.9 million in revenue in the six months ending March 31.”