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Critical condition
The cost of caring for victims of the Station fire will stress the already fragile economic health of Rhode Island’s hospitals
BY BRIAN C. JONES

 

More on the Station fire

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Critical condition: The cost of caring for victims of the Station fire will stress the already fragile economic health of Rhode Island’s hospitals. Brian C. Jones reports

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One of the most serious effects of the Station nightclub fire could be felt by the very institutions — hospitals in Rhode Island and Massachusetts – that saved so many of the victims.

As many as 36 of the estimated 217 persons cared for by the hospitals may not have medical insurance. The cost of providing free care could run into the millions of dollars.

What’s more, even for patients who have health insurance, payments may not cover all of the hospitals’ costs. This happens even in routine situations, and some of the burn and lung injuries from the nightclub fire require intensive, sophisticated long-term care.

All of this comes as the finances of hospitals in Rhode Island are sickly — and have been so for years. In the first three months of the current financial year — prior to the February 20 fire in West Warwick — the state’s hospitals already had lost $22 million. Thus, the impact from fire-related costs could be unusually burdensome for the hospitals.

Edward J. Quinlan, president of the Hospital Association of Rhode Island, the hospital’s trade association, believes the hospitals’ losses will run into "the millions" of dollars, although a total hasn’t yet been estimated. "This clearly is a significant issue," adds Quinlan. "It illustrates again the unique position of hospitals: we provide care, complete care, regardless of ability to pay."

Quinlan doesn’t describe the expenses from the Station fire as the straw that will break the financial back of the hospitals.

He would say only that the costs will add extra trouble to an already hard-pressed system. "Make no mistake, our state is extremely stressed, and Massachusetts is in a similar position," Quinlan says.

The ability of a single catastrophic event to rattle the finances of the state’s health care system raises the question of what would happen in the event of a terrorist incident or other large-scale emergencies.

As of this writing, the federal government has failed to grant the state’s requests for disaster relief.

Jeff Neal, a spokesman for Governor Donald L. Carcieri, says the governor understands the pressure felt by the hospitals, and has discussed getting federal aid for them with Andrew Card, chief of staff to President Bush. One possibility cited by Card, Neal says, could be increasing the Medicaid funds that the hospitals receive each year as compensation for providing free care. This is the same category of funds that Carcieri proposed cutting by $6 million for the hospitals in his upcoming state budget — a measure already being fought by hospital lobbyists — although Neal stressed that the proposal was in the works long before the Station fire.

"The governor is very much aware that this is going to be a significant financial burden on the hospitals," Neal says. "He appreciates their commitment to treating these patients and is going to do whatever he can to assist them." But just what the state might be able to do — including changing the governor’s budget proposal — is not yet clear. "There are so many competing factors here in terms of people and organizations who are going to be needing assistance," Neal notes. "It’s too early to say what we will be able to do."

NO ONE IS worried that the patients from the fire will lack for full medical care.

Rhode Island’s 10 nonprofit general hospitals are obligated to provide a full range of care for everyone, regardless of whether they have health insurance or their own money to pay the bills.

Officials of the two hospitals that treated the bulk of the patients — Kent County Memorial Hospital in Warwick, and Rhode Island Hospital in Providence — say they can’t yet calculate the financial impact. "Our initial review is that a significant number of patients are uninsured, and that presents a concern not only to the hospital, but the state’s health care system," says Kent spokesman Brian Wallin.

Overall, Kent treated 82 patients, of which 20 were admitted overnight or longer. Other patients were transferred to different hospitals in Rhode Island or Massachusetts or treated the day of the fire and sent home. As of this writing, one remained hospitalized at Kent. Rhode Island Hospital took care of 65 patients, of whom 43 were admitted. Twenty-three patients were still in the hospital as of this writing, four in critical condition and being cared for in intensive care units.

John F. Gillespie, a senior vice president of Lifespan, the network that runs the state’s largest hospital, says 10 or 11 of the patients at Rhode Island Hospital lacked insurance. But like other experts, Gillespie predicted that patients’ health insurance might not cover all of the costs.

"When you throw the full force of technology and expertise into treatment, it gets to be expensive very fast — these are minute-to-minute, hour-to-hour cases," Gillespie says. "I can’t think of anything worse than being 60 percent burned."

No one has yet estimated even a range of costs for some of the more seriously injured patients, Gillespie says. But it’s not unknown in instances in which sophisticated, lengthy care is needed for costs to run between $500,000 and $1 million.

Depending on the circumstances, having one patient in Rhode Island Hospital’s intensive care units can run as much as $5000 a day, and that’s not counting time in the operating room and other service areas of the hospital. Thus, a month in the ICU might be $150,000.

This kind of unexpected cost comes when hospitals have been severely crippled financially. During the last fiscal year, for example, Rhode Island Hospital had an operating deficit — the difference between what it costs to treat patients and what it took in various revenues — of $4.8 million. Part of that loss was the enormous amount of free care: nearly $48 million.

"The extent of the financial impact: only time will tell," Gillespie says. "There are a myriad of different payers, and what it all adds up to we won’t know until the last patient leaves. We are hopeful the coverage is there, but the mission of the hospital is to take care of patients first."

Kent Memorial Hospital, which after Rhode Island Hospital, is the state’s second largest, had a slightly better year last year — a $2.1 million gain. Its free care bill was $4.3 million.

Wallin, the Kent spokesman, notes that the $2 million profit "does not go very far" in the current medical climate, and certainly not with the extra costs of the Station catastrophe. "I think it’s fair to say in Rhode Island all of the state’s hospitals are in a fragile economic status," he says.

Wallin notes that the hospitals are still coping with what they believe is too-low compensation from private insurances as well as the federal Medicare program for the elderly and the federal-state Medicaid program for the poor.

Among other financial pressure are high labor costs, exacerbated by a nursing shortage, which means that hospitals either pay more in overtime or offer higher salaries to attract the highly trained workers. Another major cost, Wallin said, is prescription drugs.

Wallin notes that Kent is committed to giving full treatment to patients, regardless of insurance status, and he says it won’t even send bills to fire victims until after officials thoroughly discuss options with them.

AT BOTH Kent and Rhode Island hospitals, officials are hoping that the Medicaid program will help some of the patients who lack insurance.

Jane A. Hayward, director of the state Department of Human Services, says the state, too, is working with families. But she cautions that single adults, 18 to 65, must be severely disabled to qualify for Medicaid. People who are in low-income families that already qualify for the state’s RIte Care program, financed by Medicaid, could be in luck, however, because they might qualify for RIte Care’s health maintenance organization style coverage.

The Station tragedy will place a burden on the state’s major medical insurance company, the nonprofit Blue Cross & Blue Shield of Rhode Island. But one official says it certainly won’t break the company, which has steadily increased its financial reserves in the past few years. "This will probably be the most significant claims situation we faced in our 64-year history," says Scott Fraser, a spokesman for Blue Cross, which covers 658,000 people.

But he says that because of the $240 million in reserves that the company has built up, there’s no question that Blue Cross will be able to weather the impact. Fraser notes that Blue Cross’s critics in recent years have complained that the company is adding too much money to its reserves. But unexpected crises, such as the West Warwick fire, show the need for such emergency funds, he says.

The cost of care will be in the "millions of dollars" for the some 30 hospitalized patients who have coverage through Blue Cross, as well as for many more who received emergency room treatment, Fraser says. "While this is a terrible tragedy, it certainly will not be a hardship on Blue Cross to pay the claims," he says. "That is what we are here to do."

Hospitals won’t be the only health care providers impacted by the enormous impact of the fire. Even once out of the hospital, some burn and smoke victims will require extensive care: for treatment of burns, for physical therapy and for mental health counseling and treatment.

For example, VNA of Care New England, a visiting nurse service run by the same network that runs Kent County Memorial Hospital, is caring for nine patients in their homes. The nursing group — currently running a deficit — has had to form a new "burn team," whose nurses have received special training.

And home visits, which routinely usually last only an hour, can run up to three hours because the care is so complicated, says spokeswoman Lisa Scott. This means those nurses aren’t available for some of their other rounds.

Just changing bandages and applying germ-fighting ointments can be time-consuming. It can take up to one hour to change a dressing on one finger for a patient with second- or third-degree burns, the service says.

The state itself does not know how many of the injured persons lack insurance. Rhode Island Hospital says that about one out of six patients were uninsured, and in the state generally, one out of 10 persons lacks coverage. Thus, of the 147 persons at Rhode Island and Kent hospitals, and another 70 at eight other hospitals, the number could range from 22 to 36 persons.

At the very least, that means without outside help — such as that from the federal government — it’s likely to deepen the deficits for the hospital system.

No major hospital in Rhode Island has had to go out of business in recent years. But in the late 1990s, hospitals have lost millions of dollars as managed care companies and the federal government have struggled to contain skyrocketing costs — a trend that continues to this day.

A wave of mergers brought many independent hospitals under the wing of corporate-style networks, and there was a fierce debate whether for-profit chains should come into Rhode Island (laws were passed to discourage for-profits).

While some hospitals seemed to be pulling out of their slump recently, the collective $22 million losses for last October, November, and December surprised officials — especially compared to an $8 million shortfall in the same period the year before.

Although the Station fire clearly won’t undermine the hospital system by itself, the ongoing question remains — with all the other financial pressures — whether it could tip the scales.

Brian C. Jones can be reached at brijudy@ids.net

Issue Date: March 13, 2003
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