Lifespan faces 'significant' shortfall; cuts eyed

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 get it back on financial track.

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

In a memo to employees, President and CEO Timothy Babineau attributed the shortfall to lower reimbursement rates, an increase in charity care, longer patient hospital stays and what he described as the "prolonged economic slump in Rhode Island." He said that increased competition from out-of-state providers has also stymied the health system's ability to grow and taken a financial toll.

The shortfall reflects the continuation of a trend that began at the end of the last fiscal year, he said.

"While disappointing, the results year-to-date are not completely surprising and reflect a reality that will be with us for the next several years," Babineau told employees.

Lifespan has instituted a hiring freeze but called it premature to discuss specific cuts, including possible layoffs. The health system says that whatever steps it takes won't affect quality of care or patient safety and that it will try to minimize the impact on employees.

The nonprofit Lifespan employs more than 12,000 people and is the state's largest health system. Its hospitals include Rhode Island Hospital and its pediatric division, Hasbro Children's Hospital; The Miriam Hospital; and Bradley and Newport hospitals. It is affiliated with Brown University's Warren Alpert Medical School.

In his message to employees, Babineau said Lifespan will be looking at its budget in the coming weeks with a "renewed sense of urgency" and a focus on lowering costs.

"Expense reduction plans will be developed, discussed, refined and brought to the Lifespan board for further discussion and deliberation," he said.