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The why behind the financial report on RI hospitals

November 23, 2010

Net income for RI’s hospitals went up by more than 120% last year!  But all six independent hospitals lost money?

I asked the Department of Health for an explanation, or at least a guess, as to why independent hospitals are consistently less financially stable than medical centers associated with the Lifespan or Care New England chains. The reply?

“I can’t speculate as to why.  This report just has the facts.  It is what it is.”

The spokesperson avoided my question, but in general, most people agree on the answer.  Brown Professor Vincent Mor described the situation in a feature I produced earlier this year-

If a hospital is not part of a system they have to negotiate with the insurer independently.  And that means a small community hospital that’s not part of a network is at a serious disadvantage, because they’re going to be doing some things that other hospitals are getting a lot more money for.

Basically, Mor says, independent community hospitals are “sitting ducks” without the leverage that large chain hospitals have to negotiate prices with insurance companies.  In the end, they get paid less to do the exact same procedures.

Independent hospitals have been complaining about this for years, but  a report by the state’s Health Insurance Commissioner finally offered some data to back up the claim.

For example,  the data shows that on average Blue Cross Blue Shield and United Health Care pay Lifespan hospitals $5,000 more for the average patient stay than they pay smaller, community hospitals like South County.

What’s a small independent community hospital to do?  Some, like St. Joesph’s and Roger Williams Medical Center have merged to become CharterCare.  Landmark Medical Center in Woonsocket is hoping Caritas will come to its rescue.  Memorial is flirting with Brigham and Women’s Hospital

Is getting bigger the only option?  South County Hospital and Westerly are still hanging tough on their own, but for how long?

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