Lifespan health system is considering several options to cut costs after reporting significant operating losses in the fiscal year ended Sept. 30, according to The Boston Globe.
After factoring in investment income, the Providence, R.I.-based company's net loss totaled $35 million. In fiscal year 2018, the system earned a profit of $24 million, according to local news station WPRI.
A closer look at the numbers reveals that Lifespan reported operating losses of $55 million in fiscal year 2019, which it attributed to "a dramatic and unexpected reduction in Medicare rates" and "excessive demands" placed on it after Care New England closed the money-losing Memorial Hospital in Pawtucket, R.I., according to the Globe.
"While the fiscal year 2019 financial results are concerning, as Rhode Island's largest and most preferred provider of health service, and the state's largest employer, we are committed to regaining our financial viability," Timothy Babineau, MD, president and CEO of Lifespan, told the Globe.
The company has set a goal to earn a profit of $1 million in fiscal year 2020 and hired a healthcare consulting firm to lead a restructuring effort.
To help cut costs, Lifespan has offered early retirement packages to employees 65 or older with 10 years of service to the organization. Executives, physicians, advanced practice providers and psychologists are not eligible. Lifespan estimates 400 to 500 employees will be eligible.
When asked if layoffs were an option for Lifespan to cut costs, Dr. Babineau told the Globe they would be a "last resort."
"Layoffs are always something of a last resort. If that is what it took to get us back on financial footing, we would consider it in the future — but only after thoughtful analysis to ensure care at the bedside is not impacted," Dr. Babineau told the Globe.
Read the full report here.
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