Lifespan projects loss for 2014

For the first time in more than a decade, Lifespan’s board of directors approved a budget with a negative bottom line — a $12 million operating loss for fiscal year 2014. More

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Lifespan projects loss for 2014

IN AN EMAIL TO LIFESPAN STAFF, President and CEO Dr. Timothy J. Babineau revealed that the health care chain is projecting an operating loss for its upcoming fiscal year 2014.
Posted 9/12/13

PROVIDENCE - For the first time in more than a decade, Lifespan’s board of directors approved a budget with a negative bottom line — a $12 million operating loss for fiscal year 2014. President and CEO Dr. Timothy J. Babineau cited reduced Medicare and Medicaid payments, reduced reimbursements from commercial insurers, and increased uncompensated care to patients who cannot afford to pay.

In a letter to his Lifespan colleagues obtained by Providence Business News relating the results of the Tuesday board meeting, Babineau wrote that rising health care costs have led to reduced Medicare and Medicaid payments. This change, in addition to reduced reimbursements from commercial insurers due to regulatory caps made by the R.I. Office of the Health Insurance Commissioner, has decreased Lifespan’s operating revenue. Babineau also cited a surge in the amount of “free care” provided by the hospital – such spending has doubled from about $50 million in 2006 to nearly $110 million for fiscal year 2013.

“We understand and fully support the necessity of stabilizing health care costs. However, the relatively sudden and dramatic decline in reimbursement challenges our system’s ability to make the necessary corrections in a short period of time,” Babineau wrote, explaining that Lifespan is currently working to rebuild its business model. It is developing new models of care and payment, investing in a new information system, and growing its ambulatory centers, in addition to other initiatives, according to the letter.

“The good and miraculous work I see being performed every day by our employees, physicians and scientists reinforces my belief in the strength of our system and the nobility of our mission. Even in this time of tremendous upheaval and change, those truths remain undiminished,” Babineau concluded.

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