RI Healthcare Curveball: Ruggerio to Introduce Bill to Place Moratorium on For-Profit Hospitals

Tuesday, January 12, 2021

GoLocalProv News Team

 

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Senate President Ruggerio PHOTO: GoLocal

As the wheeling and dealing in the hospital industry in Rhode Island heats up Senate President Dominick Ruggerio on Tuesday will file legislation that would impose a one-year moratorium on hospital conversions involving for-profit corporations as the seller or the buyer.

This proposed legislation would impact CharterCARE and potentially block the efforts of StoneBridge to purchase Care New England. 

As GoLocal exclusively reported in early December, StoneBridge Healthcare has offered a financial package of $550 million comprised of a purchase price of $250 million and a $300 million investment in the hospital group.

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Care New England owns and operates Woman & Infants, Kent and Butler hospitals among its assets.

Since the early fall, Care New England has been in merger negotiations with Lifespan — this is the fourth round of merger negotiations between the two over the past 20 years. Over the past years, Care New England has also had failed merger negotiations with South Coast and Boston healthcare giant Partners -- now rebranded Mass General Brigham.

“It is critical for Rhode Island that Lifespan have viable competition.  It is important for quality of care, for physicians and for Brown’s medical school," StoneBridge’s CEO Josh Nemzoff told GoLocal.

Care New England reject the initial StoneBridge offer.

 

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Memorial Hospital closed by non-profit Care New England PHOTO: GoLocal

Ruggerio Has Pointed Comments About CharterCARE and Memorial Hospital

“The questions swirling around the financial instability of Fatima and Roger Williams hospitals stem in no small part from their for-profit status,” said Ruggerio. “Public allegations have been made that the hospital network they are a part of has incurred over a billion dollars in debt, and that the owners have personally taken over $500 million in dividends. They are insolvent and headed for bankruptcy, according to allegations made in court filings.”

But Ruggerio tried to link the instability of the industry and specifically the closure of Memorial Hospital to the need for the moratorium, but the Pawtucket hospital was owned by non-profit Care New England who bought and shuttered Memorial Hospital causing nearly 1,000 layoffs. 

Ruggerio said, “We have seen the ripple effect that the closure of Memorial Hospital had on hospitals across the state. Hospital facilities and staff are stretched to their limit, and the pandemic has only exacerbated the strain. The strength of our overall statewide hospital network is critical to the wellbeing of Rhode Islanders. We need to conduct a comprehensive review of for-profit hospital entities and their impact on the financial condition of the hospitals they operate and the broader health care network in the state.”

Ruggerio has asked Senator Louis DiPalma to convene the Senate Rules, Government Ethics & Oversight Committee to review matters related to Fatima, for-profit hospitals and hospital conversions. 

The Committee is expected to launch a series of hearings beginning Wednesday, January 20. Over the course of their hearings, they will review applications pending at Health Services Council for a transfer of control at Fatima and Roger Williams, the Hospital Conversion Act application pending through the Department of Health and Office of Attorney General, and the broader impact of this and other potential for-profit hospitals on the state’s overall hospital network.

One issue Ruggerio did not address is a ticking time bomb — the underfunded pension fund at Care New England. As GoLocal exclusively reported, financially troubled Care New England unveiled in financial documents in December that it has a growing unfunded pension obligation. 

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St. Joseph pension retiree at a Superior Court hearing PHOTO: GoLocal

The pension liability including this fiscal year’s yet to be made estimated $30 million payment will drive the total unfunded gap to more than $160 million.

Rhode Island was rocked in 2017 when the St. Joseph hospital pension fund was forced into receivership. That has led to years of litigation.

Not counting this year’s pension payment obligation, the gap has grown to more than $130 million for Care New England.

And over the past two years, the gap has grown from $89,880,243 to $131,513,347 a 46% increase from fiscal year 2018 to 2020.

The CNE hospital group is now in negotiations to merge with Lifespan and like hospital group mega-mergers across the country, the merger faces a number of challenges. 

Questions are emerging if a Lifespan-CNE merger would be legal and pass federal regulatory review. The Federal Trade Commission has moved to block a number of potential mergers around the country that would create hospital groups with 50% market share or more. A Lifespan-CNE merger could create an entity that some estimate to be upwards of 80% market share - a de facto, monopoly.

Both hospital groups have received windfalls of payments from different federal pandemic response funds. Lifespan received a reported $200 million and provided bonuses to top managers.

Due to federal dollars, Care New England has more cash on hand than at any time in the past three years. In 2018, Care New England had just $47 million cash on hand and in 2020 that number has ballooned to $133 million. 

But, other financial issues continue to plague Care New England.  According to documents surgeries have fallen from 17,260 per year to 15,149. And, emergency room visits have fallen each of the past two years from 99,059 to 95,191 to most recently, 77,625.

 

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