Financial Impact Analysis on Hospitals in Rhode Island
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The Hospital Association of Rhode Island (HARI) engaged Health Management Associates (HMA) to complete a series of interviews with hospital chief financial officers (CFOs) representing each hospital and system of care in the state of Rhode Island to gather information on the financial impact of workforce challenges. This report follows a 2020 analysis HMA conducted, which focused on the COVID-19 pandemic’s financial effects on hospitals in Rhode Island. The qualitative and quantitative data in this paper will help inform policy discussions with local, state, and federal authorities.
Since the COVID-19 pandemic, hospitals across the country have struggled to meet both internal and external pressures. Hospitals have shouldered the burden of increased expenditures that have outpaced hospital payment rates, thereby yielding a precarious financial margin. This trajectory is unsustainable. 1 As of October 2022, median hospital operating margins across the country were said to be -0.5 percent—much lower than the 4 percent median hospital operating margins the previous year.2 The likely sources of these negative operating margins are increased labor costs and reduced revenue.
In fiscal year (FY) 2022, hospitals in Rhode Island saw an astronomical operating loss of $94,083,966. Though disturbing, such losses would have been more damaging if not for the $45 million in COVID relief funds the Rhode Island General Assembly allocated in June. As the country desperately looks to push past the COVID era, its effects linger, eroding the foundation of the health care system. Hospitals remain at the forefront of the pandemic, and because of the ongoing impact of the COVID-19 pandemic, continue to face systematic challenges.
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