Care New England lays off 58, struggles to keep Memorial Hospital afloat

Providence, R.I.-based Care New England laid off 58 employees Tuesday as it explores ways to reduce losses at its Memorial Hospital in Pawtucket, R.I.

Commenting on the job cuts, Care New England President and CEO Dennis Keefe said, "It is always our goal to avoid layoffs. Yet, with labor representing 70% of the cost of healthcare, it is difficult to reduce expenses without it touching people. We are doing everything we can to respond to our tough financial situation, and workforce reductions are a last resort."

Care New England spokeswoman Mary Kernan told WPRI news that most of the jobs being cut are at Memorial Hospital. However, she said the layoffs are unrelated to the system's plan to downsize the facility.

In late February, Care New England's board approved a plan to scale back services at Memorial to control losses. The system intends to close Memorial's maternity ward and intensive care unit, consolidate lab services and move the hospitals residency program.

Memorial recorded a $9.3 million loss in the final three months of 2015, which has caused Care New England to reduce its cash reserves to keep the hospital afloat.

Mr. Keefe is hopeful the proposed restructuring plan will keep Memorial out of bankruptcy or receivership. However, due to pushback Care New England has received on its plan to close Memorial's maternity ward, the system may have to spin off the hospital.

"If we got pushback on an obstetrics unit that has three patients a day, you can imagine the pushback we'd get closing a whole hospital and declaring it bankrupt," Mr. Keefe told WPRI news.

Mr. Keefe said he wants the changes at Memorial in place by the end of September to allow Care New England's proposed merger with New Bedford, Mass.-based Southcoast Health to proceed smoothly. However, the Rhode Island Department of Health must approve the restructuring plan before services can be eliminated at Memorial.

More articles on healthcare finance:

Massachusetts hospital to cease inpatient services
CHS spinoff issues 2016 financial outlook
UVM Health Network wants to pass along $15M in excess revenue

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