By Kim Kalunian, WPRO News
The fiscally troubled Lifespan, the parent company of local hospitals like Rhode Island and Miriam, may face several more speed bumps before the road ahead levels again. Lifespan isn’t denying that they’re in the red, though they won’t say how bad their fiscal troubles are. Now, with multiple changes to the healthcare system and the Sequester coming down the pike, things may get worse before they get better.
With the institution of the Affordable Care Act and Governor Chafee’s statewide plan, Rhode Islanders will be able to take part in the Health Benefits Exchange come the fall. The Exchange will allow residents who don’t receive insurance through their employer to gain access to federal tax credits or Medicaid coverage to cover the cost of insurance plans.
Mark Montella, Lifespan's senior vice president of external affairs, told WPRO it’s still early to say how the Exchange will impact Lifespan, but it’s something that hospitals and insurance companies are actively involved in.
Then there’s the Sequester, the series of broad-based federal spending cuts totaling $85 billion.
Montella said it will be difficult to tell in the short term what the impacts of the Sequester will be, but estimates the cuts to Lifespan could be as high as $45 million annually. He also said their graduate medical education funding will take a hit, which is a major component of Rhode Island Hospital.
“It’s a pretty sizeable impact,” he said.
And then there comes Medicaid expansion.
“Obviously I think that getting more people insured is a good thing,” said Montella, who said it’s one more thing Lifespan will have to keep its eye on in the future.
Montella said they’ve yet to find out about the specifics of reimbursements and subsidies under the expanded Medicaid plan. He said it’s likely there will be “some disruptions financially for some period of time” and that they’ll have to manage the finances.
“There will be challenges, I don’t want to minimize that,” he said.
Despite the potential for continued financial woes, Montella said it’s better for more people to be insured and have access to primary care services.
Montella said an unanticipated acceleration of healthcare trends contributed to their current financial status. So what are the trends? Reductions in hospital admissions, to start.
“The in-patient business is evaporating,” said Montella. He said a drop in discharges and decreased length of stay has resulted in more than 200 fewer beds being utilized statewide since 2007.
Montella said he believes a greater focus on obtaining primary care and chronic disease management have contributed to fewer hospital patients.
“People aren’t needing hospitals at the same rate they were,” he said.
Montella said it’s “emblematic” of what insurance companies have been pushing for people to do: seek primary care more often, and visit the emergency rooms only in emergency situations.
Another trend? An uptick in charity care.
“I think it’s undeniable that we’ve seen an enormous increase in charity care over the past 4 and 5 years,” he said. “Quite a bit of that is probably linked to the economy.”
Though it was a nationwide recession, Montella said Rhode Island has been “impacted even more acutely.”
“More and more people are coming to us unable to pay,” said Montella, something that “was and has been a growing concern to us.”
It’s the gap between services rendered and payment received that’s causing Lifespan to have a rocky fiscal year so far.
“What we have said is that…our performance year to date is off budget and frankly I’m not inclined to talk about the number specifically,” said Montella.
Montella said Lifespan is concerned and they’re looking for ways to stay “viable.” He said it’s too soon to say if Lifespan, the second largest employer in Rhode Island outside of the state itself, will have to conduct any layoffs.
In the short term, Montella says there will be challenges and disruptions, but he’s hopeful a “recalibration of the system” will help the industry to eventually stabilize.
