Care New England’s Finances Are “Distressed” Claims the Hospital in Effort to Expedite Merger
Thursday, September 06, 2018
Is Care New England's financial situation improving or is the hospital group, and its individual hospitals, in financial "distress"?
It may be one of the key questions that Rhode Island state regulators need to consider in the review of the biggest hospital merger in state history.
The effort by Care New England — who owns Kent, Butler, and Women & Infants Hospitals — and Boston-based hospital giant Partners HealthCare to complete an “expedited” deal continues to move forward.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTOn Wednesday, Care New England submitted new documents to the RI Department of Health (RIDOH) claiming that the hospital is “distressed.” The designation of “distressed” reduces the scope and timeframe of the review process by the RIDOH and the Rhode Island Attorney General.
But less than a month ago, a Care New England press release trumpeted the improving financial situation.
Documents Submitted to RIDOH Claim Distress
In a letter to RIDOH’s top hospital regulator Michael Dexter, the CEO of Care New England swears that the hospital is in significant financial risk.
“I certify that the acquiree [Care New England] operates a distressed Rhode Island hospital facing significant financial hardship that may impact its ability to continue to operate effectively without the proposed conversion. I certify that the information contained in the materials is complete, accurate and correct,” according to the letter signed by James Fanale, CEO.
The claims in the submission to RIDOH has a more dire tone than a press release issued in August reporting Care New England’s improved financial performance, “‘The financial information reported today continues to show that the focus, strategic planning, and dedication of staff across CNE is making a significant impact,’ said Fanale. ‘We continue to make important strides in our clinical and academic partnership efforts and look forward to building off this positive momentum as we remain focused on quality, service, and access,’” said the August 14 press release.
“Specifically, successful implementation of growth initiatives and cost management has been very effective. Action plan tracking, daily productivity monitoring, and revenue cycle improvements are making an impact on performance. More initiatives targeting growth, leakage, access, cost savings, and patient retention are ongoing,” the Care New England press release stated.
Distressed or Improving Financial Condition?
To be deemed “distressed” the merging hospitals must assert that the acquired hospital triggers one or more of the following criteria — Care New England makes the assertion in the nine-page letter to RIDOH that both its individual hospitals in the group and the group as a whole fail these economic tests.
Operating loss of the two most recent completed fiscal years
Less than 50 days cash-on-hand
Current asset to liability ration is less than 1.5
Long-term debt capitalization is greater than 75%
Impatient occupant rate of less than 50%
Below investment grade by a major rating agency
The effort by Care New England and Partners to have the merger placed on the fast-track for review continues before the RIDOH.
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