Rhode Island’s hospital conundrum

Two recent controversies highlight what hospitals face today. The first is the attempt by Care New England to eliminate obstetrics (and likely other) services at Memorial Hospital. The second is the attempt by Texas-based Neighbors Emergency Center to establish two freestanding emergency facilities in Rhode Island.

Both, in different ways, demonstrate hospitals’ challenges.

Rhode Island planners since the 1970s have known that we have too many acute care hospitals for a state of 1 million people. Yet, communities are fiercely protective of “their” hospital, and understandably so. That’s where their families always got their care, and they are their community’s largest employer.

However, most of today’s hospitals are operating using an untenable business model. Tomorrow, doing better may well mean not to expand, and often it will mean doing fewer things better, consistent with coordinated statewide needs and core competencies.

- Advertisement -

And thus with obstetrics. While I have no knowledge what was represented to the health department and attorney general in 2013, it makes no sense for CNE to duplicate services already available at Women & Infants Hospital.

Recognizing Rhode Islanders’ legendary dislike of traveling more than 3 miles for anything, we’re talking less than 10 miles to the best neonatal intensive care hospital in southern New England. Meanwhile Memorial Hospital, which was fortunate to have been acquired by CNE, has been bleeding money and at the least needs a tourniquet.

The freestanding emergency department raises another issue. Health care has never been about consumerism for more reasons than we have room here to discuss. But it should be. And consumerism would support FSEDs, just as consumerism favored MinuteClinics in CVS Health Corp. stores, something that took forever to be allowed in Rhode Island, CVS’ home state.

FSEDs can charge lower fees than a hospital ER, because they have a fraction of hospitals’ overhead costs. They are more convenient and user-friendly. Assuming the quality of care is at least as good as in a hospital and the risk of hospital-acquired infection less, what would you choose? Isn’t this about us?

Competition and survival of the fittest seem to work for consumers in other areas. BUT, and there’s always a but … hospitals have enormous infrastructure demands, at least under today’s model. FSEDs (as is true with most freestanding health care facilities) bleed off hospitals’ more-lucrative revenue streams. And there are related issues of FSEDs not taking all comers regardless of insurance (under EMTALA, hospitals must take all comers regardless of insurance), cherry-picking patients, focusing on the more affluent neighborhoods, etc.

FSEDs do provide more sophisticated service than urgi-centers, but they will charge more. Some claim they will drive urgi-centers out of business, driving up our overall costs. There is some truth in health care to the build-it-and-they-will-come phenomenon, and that the freestandings may actually create demand rather than fill it.

These sorts of issues must be addressed in the context of an overall new hospital business model and a statewide health care plan.

We all know that CMS and commercial insurers are changing how hospitals are paid. It’s no longer just about a volume-based culture of doing more “things.” It’s slowly becoming about results (quality of care and outcomes at lower cost). It’s the lower cost part that has hospitals reeling, because however you cut it, lower cost means fewer employees.

While we applaud hospitals when they hire more Rhode Islanders, the real question is whether increases in staffing make economic sense: Do they improve care and lower costs enough to warrant the additional salaries? Ever check to see how many more employees Lifespan and CNE have today vs. 1991, when our population was … 1 million?

Earlier this spring a photo appeared in [a local newspaper] of the Ringling Bros., Barnum & Bailey Circus elephants marching up Eddy Street. It reported on the last circus show with elephants, in Providence no less.

The traditional circus also is a challenged business model that was “leap-frogged” by Cirque du Soleil, what Saul Kaplan of the Business Innovation Factory would call a “transformational business model.”

Likewise, it would seem that our hospitals must retire their “elephants” and adopt a transformational business model.

In that regard, Rhode Island hospitals need our support as never before. But not in the traditional way of resisting all change. Their CEOs have incredibly difficult decisions to make.

Their boards of directors, who likely came onboard not to cut back services or reduce employees, but to expand them and build more bricks-and-mortar facilities to do more for their communities, are finding themselves as strangers in a strange land. They need our support and encouragement to have the courage to transform. Debate, yes; but thoughtfully. This is not about just one community. •

James E. Purcell is the former CEO of Blue Cross & Blue Shield of Rhode Island. He is also an attorney and operates a national consulting practice on workplace wellness.

No posts to display