Even after receiving millions from the state, hospitals in R.I. are still bleeding money

“We simply can not continue to rely on excessively expensive traveling healthcare workers to fill the gaping holes in our workforce,” said the president of the Rhode Island Hospital branch of the Nurses & Allied Professionals union

A health care worker walks through the hallway of a hospital operated by Care New England to handle a surge of COVID-19 patients in December 2020.David Goldman/Associated Press

PROVIDENCE — Since coming out of retirement to be the interim CEO and president of Lifespan Corp., Arthur Sampson has been dreading what he says is inevitably coming down the pike: the backlog of sick patients who did not have their tests and screenings done during the pandemic.

The influx of, say, undiagnosed cancer patients could coincide with flu season or come on the heels of yet another COVID variant surge. And it could come when hospitals, like the five Sampson oversees as the leader of Rhode Island’s largest health care system, are bleeding money despite receiving millions in relief funding from state and federal resources.

Like Lifespan, hospitals across Rhode Island are strapped due to the labor shortage that has crippled the industry nationwide, and hospital executives are looking for ways to tighten their budgets for the next fiscal year.

“Making a budget is like making a sausage. You don’t want to look at it too closely,” said Sampson when asked about the status of Lifespan’s Fiscal Year 2023 budget, which will begin Oct. 1. By the end of Fiscal Year 2023, “we expect a thin margin. But [we’re] in a hole today.”

Lifespan received $22.9 million out of the $1.13 billion Rhode Island received as part of the American Rescue Plan Act, the largest share of any other hospital group in the state. But it’s already been spent to mitigate Lifespan’s $69.5 million operating loss and 142 billion net loss over the nine-month period ending June 30.

Sampson, who took over as interim president and CEO on June 1, said Lifespan is negotiating with third-parties and the state, but does not plan on eliminating any services “at this point.” Nor does he foresee any potential layoffs or early retirements in the immediate future. Instead, he said the health care system needs to boost their workforce and fill their 1,800 open positions in order to actually save money. Those positions are being currently filled by contract labor — such as traveling nurses and agency technicians — which costs a hospital two to three times as much as a permanent employees.

In May, Lifespan spent $13.1 million on contract labor. By July, they spent about $9 million after filling more than 400 positions.

“We’ve just been through a once in a 100-year pandemic. We’re looking for some relief to cover the inflation” with both government payers and the Rhode Island Office of the Health Insurance Commissioner, said Sampson.

In total, hospitals in Rhode Island received approximately $45 million from the state’s $1.13 billion in American Rescue Act Plan funding, which is significantly less than the $200 million the Hospital Association of Rhode Island (HARI) requested earlier this year. Lifespan, along with other hospital groups, unions, and their advocates, are expected to ask for additional relief when lawmakers return to the State House in 2023.

The cost to employ the temporary workers, which is necessary in order to provide patient care when a health care system doesn’t have enough employees, can be unpredictable depending on demand. The effects are being felt across the industry, including in nursing homes. When there’s a labor shortage in skilled-nursing facilities, hospitals can’t discharge patients to them and admit more patients quickly. It has caused a traffic jam — and financial headache — across the system since the pandemic began.

But the finances of the health care industry is “an ongoing problem that really needs a long-term solution,” said M. Teresa Paiva-Weed, HARI’s president, on a phone call Monday. She’s the former president of the Rhode Island State Senate, and when the General Assembly reconvenes in January, she said she plans on advocating for higher Medicaid and Medicare reimbursement rates for hospitals, she said.

Frank Sims, a nurse who is the president of the Rhode Island Hospital branch of the United Nurses & Allied Professionals union, said hospitals can attract and retain full-time workers by offering better working conditions, increased wages and benefits, tuition reimbursement programs, and other incentives “to make people want to do this rewarding but difficult work.” He said hospitals need to bolster partnerships with federal and state government and universities to build a more robust and locally-based workforce.

“We simply can not continue to rely on excessively expensive traveling healthcare workers to fill the gaping holes in our workforce,” said Sims.

The state’s second largest health care system, Care New England, posted a $31.6 million operations loss and a $71.2 million deficiency of revenues over expenses for the third quarter. On top of HARI’s original $200 million request, CNE executives had asked the state for $108 million of the state’s ARPA funds to help fill staffing holes and construct new medical units to increase supply. Instead, CNE received $11 million in ARPA funds.

Jesse Martin, the newly appointed executive vice president of Service Employees International Union (SEIU) 1199 New England, accused CNE of “failing to respond to repeated demands to engage and bargain” over the funding allocated in the budget.

“We are concerned that CNE will not be able to meet the demands put on them for spending the public dollars they were awarded,” said Martin. “Instead of spending millions on agency staff, CNE should expand its workforce through training, higher wages, and educational support for lower income workers of color.”

“Women and Infants and Butler Hospitals have always and continues to have open dialogue with 1199 leaders and employees on this and other matters brought forward,” said CNE spokeswoman Raina Smith.

SEIU 1199 New England represents over 2,300 registered nurses, clerical staff, nurses aides and assistants, service workers, maintenance workers, mental health workers, therapists, therapy assistants, and other professionals within Care New England. Martin said state lawmakers “must hold hospital CEOs accountable” in order to ensure public funds are spent on “quality care and jobs.”

“The staffing crisis is real, and so are the effects on patient care,” said Martin.

Butler Hospital, psychiatric hospital owned by Care New England, received another $8 million to create a “short-stay unit” of 25 beds that they piloted during the Omicron variant surge in January.

According to financial documents shared with the Globe on Monday, CNE has seen the volume for most services return to pre-pandemic levels, but inflation has caused an increase in labor costs and the price of medical supplies. CNE executives are working with financial advisors, investment banks, the state, federal government, and grant agencies to access “all available resources to help fund ongoing operations.”

“Rhode Island’s health care system is in crisis,” said Paiva-Weed. “The impact of the pandemic over the past two years... is going to impact our hospitals and their ability to secure and obtain professionals.”

“Rhode Islanders should not be concerned that their quality or access to care will be impacted,” she added. “However, it is critical that we address the financial stability now than delay it to a point where those issues will be possible.”