Care New England Financials Mixed After Closing Memorial Hospital
Friday, May 11, 2018
Care New England announced that they have achieved an income from operations of $4.4 million in quarter two of the fiscal year 2018, but that does not tell the full story as the company underfunded its pension contributions, decreased uncompensated care, and continues to defer capital investments.
For over a year, Care New England has been in negotiations to sell to Partners Healthcare of Boston. The deal has been widely criticized for fear of loss of local control and projections of significant job loses to the system.
“Today’s reporting represents important and significant progress in CNE’s efforts to dramatically improve its financial performance. While we continue to experience some significant loss associated with Memorial Hospital, we are experiencing tremendous results otherwise. While we expect these losses associated with Memorial to continue at a declining rate through the fiscal year, we now can see to a point in the near future where those losses will end due to the closure of the facility that took place in January. These results, coupled with the successful turnaround that is taking shape across the system, is a testament to the dedication and hard work of everyone at CNE. We are extremely optimistic about our current position and the partnership opportunities in which we are now actively engaged,” said James E. Fanale, MD, president and CEO, CNE.
For the six months ending March 2018, the Obligated Group posted a loss from operations of $4.3 million.
Failed to make proper pension fund payments. CNE has a massive unfunded pension liability.
Decreased uncompensated care by 20 percent.
On a consolidated basis, CNE including Memorial experienced a net loss from operations of $7.0 million for the second quarter of FY2018 and $40.7 million for the six months ended March 31, 2018.
Consolidated CNE losses include the Memorial losses before and after the December 22, 2017 withdrawal from the Obligated Group and a one-time, non-cash loss on asset impairment at Memorial Hospital.
For the first two fiscal quarters of 2018, CNE’s financial performance has improved more than $29 million from the same period last year.
Continues to defer significant capital investments.
Related Slideshow: 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
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?
- Care New England’s Board Votes to Close Memorial Hospital, Prime Deal Collapses
- Care New England President Keefe Announces Retirement
- Care New England Takes Another Hit, S&P Downgrades Bonds
- UNAP Calls Care New England’s Effort to Close Memorial Hospital Intensive Care “Irreponsible”
- Care New England Claims They Will Continue in Pawtucket Area, But Refuse to Give Details
- RI Healthcare Industry Moving Towards Chaos - Partners Acquisition of Care New England in Doubt
- Care New England Faces More Changes - Already Cut Work Force from 8,500 to 6,500
- 7 Implications and Unintended Consequences of a Care New England and Partners Merger
- Robert Whitcomb: Care New England and Partners; Fragile Freedom; Urban Shadows
- Care New England Begins Major Staff Reductions—Many at Women & Infants Hospital
- “Failure of Health Policy in RI” - Former Director of Health on Care New England - Partners Merger
- Health Care Union Files Lawsuit Against Care New England Over Memorial Hospital Closure
- Care New England, UNAP Reach Agreement to Keep up to 200 Healthcare Jobs at Memorial
- Care New England Continues to Struggle — Pension and Cash Are Serious Challenges
- Partners, Proposed Purchaser of Care New England in RI, Is Outsourcing High Tech Jobs to India
- Partners HealthCare and Care New England Deal Has a New Wrinkle - Lifespan
- Whitcomb Warns of Lifespan Entering a Care New England-Partners Deal on LIVE
- Care New England Closing Another Facility
- Boston’s Partners HealthCare Moves Forward to Absorb Care New England, Faces Opposition in RI
- Care New England, Partners HealthCare Extend Letter of Intent Through Jan. 2018
- LIVE: Whitcomb on Brown’s Care New England Play and Why Oprah Won’t Run
- Brown Opposes Care New England Sale to Partners, Teaming with Prospect
- EXCLUSIVE: Care New England Turned Down $400M+ Offer in 2015 — Would Have Saved Jobs and Memorial
- DiPalma Calls for Strengthening of Hospital Conversion Act Due to Potential Care New England-Partner