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Lifespan health system warns of budget woes

PROVIDENCE — The Lifespan health system, one of Rhode Island’s largest employers, is facing what it described Friday as a significant budget shortfall and is asking management and employees to propose ways to save money that will help it recover.

Lifespan said in a statement it has fallen ‘‘significantly below budget’’ in the first five months of the fiscal year, which began Oct. 1.

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In a memo to employees, chief executive Timothy Babineau attributed the shortfall to lower reimbursement rates, an increase in charity care, longer patient stays, and the state’s struggling economy. He said increased competition from out-of-state providers has also stymied the system’s ability to grow.

Lifespan has already instituted a hiring freeze but called it premature to discuss specific cuts, including possible layoffs.

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