Care New England Continues to Struggle — Pension and Cash Are Serious Challenges
Monday, February 26, 2018
GoLocal has secured key financial documents of Care New England’s (CNE) and they unveil that the hospital group continues to struggle financially and miss budget targets even after the closure of Memorial Hospital.
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."
"[The Partners acquisition of CNE] also would likely increase the cost of care and reduce the ability of Rhode Islanders — consumers, businesses, healthcare workers and policy-makers — to have a voice in how our healthcare system works. If the focal point of Rhode Island healthcare shifts to Boston, excellent physicians (many of them Brown-trained) could be less likely to choose Rhode Island as a place to practice. In addition, the full economic benefits of a strong local academic health system — one that brings in federal grants, generates spin-off companies and creates new jobs in Rhode Island— would be lost, perhaps forever," said Paxson.
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.
Trending the Wrong Way
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.
Related Slideshow: 7 Implications and Unintended Consequences of a Care New England and Partners Merger
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