Care New England says it lost $53M in 2015-16

Red ink at Memorial Hospital grows to $32M; company hopes to break even in 2017

Women & Infants Hospital in Providence. (photo: Care New England)

PROVIDENCE, R.I. (WPRI) – Care New England, Rhode Island’s second-largest hospital group, lost money for the second straight year in 2015-16 as red ink at Memorial Hospital and a restructuring push weighed on the company’s finances.

Care New England’s net loss totaled $53 million during the 12 months ended Sept. 30, almost double the net loss of $28 million the group posted for the same period a year earlier, according to an audited financial statement obtained by Eyewitness News.

The nonprofit health system, whose flagship hospital is Women & Infants, said overall revenue rose by 1.5% in 2015-16 to total $1.16 billion.

Memorial, the cash-strapped Pawtucket facility acquired by Care New England in 2013, reported a net loss of $32 million for the year, up from a net loss of $28 million in 2014-15. The company reduced services at Memorial earlier this year in an effort to improve its financial footing.

Also weighing on Care New England’s results was roughly $55 million in one-time expenses, notably about $30 million tied to an ongoing cost-cutting drive led by the consulting firm Huron, as well as a roughly $20 million loss from refinancing long-term debt.

“Fiscal year 2016 was a year of transition for Care New England,” spokeswoman May Kernan told Eyewitness News in a statement. She noted that some of the company’s facilities turned in a “solid performance,” but described the ongoing losses at Memorial as “serious.”

“Improving operating results and continuing to make needed investments in our accountable care organization, physician enterprise and service lines will be a focus for fiscal year 2017 where we hope to achieve a break-even year-end result,” Kernan said.

The new numbers on Care New England’s financial health follow the October announcement that the company was abandoning a proposed merger with Southcoast Health Group of New Bedford. It also comes a week after union members at Women & Infants ratified a new four-year contract, averting a strike.

Among Care New England’s other major units, Women & Infants was in the black after losing money in 2014-15, posting net income of $28 million for 2015-16. Kent County Memorial Hospital posted net income of $10 million, double a year earlier. Butler Hospital lost $2.7 million, an improvement over its loss of nearly $6 million a year earlier.

Care New England also said more than half its gross revenue from patient services came from the two major government health programs in 2015-16, with Medicare accounting for 32% and Medicaid accounting for 28%. The share from Blue Cross was roughly steady at 20%.

The state’s largest hospital group, Rhode Island Hospital parent Lifespan, posted a net loss of $29 million for the 2015-16 fiscal year, up from a net loss of $9.5 million a year earlier. Lifespan’s revenue rose nearly 8% year-over-year, topping $2 billion for the first time.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram