Delivery of Care

Watching the money flow

The recently shared data on federal PPP loans revealed a “hidden narrative” about the health care industry in Rhode Island

Image courtesy of chart prepared by WPRI's Eli Sherman and posted to Twitter

A screen shot of the first page of an excellent chart prepared by WPRI's Eli Sherman, detailing all of the Paycheck Protection Program loans in Rhode Island greater than $150,000.

By Richard Asinof
Posted 12/7/20
The release of data on the loans made by the federal Paycheck Protection Program to Rhode Island firms reveals a “hidden” narrative about the dominance of health-related businesses receiving loans of more than $1 million.
What is the appropriate forum to look at and talk about the way that health care is being delivered in Rhode Island? With the pending retirement of R.I. Health Insurance Commissioner Marie Ganim, will the R.I. Senate conduct more than a cursory review of the candidate nominated by Gov. Raimondo to replace Ganim, Patrick Tigue? Will the R.I. General Assembly consider conducting an audit of private contractors doing business with Medicaid? How can the data collected in surveys of social determinants of health by ONE Neighborhood Builders inform future interventions and investments by health systems?
In the early 1990s, United Way of Southeastern New England [now United Way of Rhode Island], in partnership with Ira Magaziner, conducted a study that was called “Needs for the Nineties,” in an attempt to quantify the public needs of Rhode Island residents in both monetary totals and in policy gaps. The total dollar figure stunned then Gov. Bruce Sundlun, who challenged the calculations. As a result of the study, United Way began to recalibrate how it made investments in community agencies, looking at the need to translate programs into outcomes.
In a post-COVID world, it might be worthwhile to conduct a similar research study, challenging the assumptions around health care investments. Certainly the loan amounts under the federal PPP program provide a starting point to look at way that investments are being made. The reality is that the status quo does not work anymore when it comes to health care.

PROVIDENCE – When the federal government finally released the data from its Paycheck Protection Program loans to help small businesses survive during the pandemic, with thanks to WPRI’s Eli Sherman expert work in charting the 17,875 recipients who received some $2 billion here in Rhode Island, it revealed evidence of a “hidden” narrative about the health care industry in Rhode Island.

Even as the coronavirus has disrupted and ravaged the health care delivery system in Rhode Island, the health care industry is still a leading economic driver, judging from the evidence detailed in the flow of federal money in Paycheck Protection Program loans.

The influx of federal funds flowing to hospitals, in particular to Lifespan and Care New England, have been critical to the economic future of the two largest health systems in Rhode Island, after they were forced to suspend elective surgeries for a sustained period in the spring. [Despite the infusion of cash from the federal government, the jury is still out on whether the current business model for hospitals is sustainable in a post-pandemic world.]

Indeed, Lifespan, with its ability to capture a disproportionate fair share of federal funds based upon the algorithm used to compute its number of patients related to COVID-19, announced that it was $23 million in the black for its 2019-2020 fiscal year, bolstered by $190 million in federal and state CARES Act funds. In turn, Care New England, which had a lower total number of COVID-19 patients, given its “specialty” hospitals including Butler Hospital and Women and Infants Hospital, reported that it lost some $13 million for the 2019-2020 fiscal year.

A major beneficiary
The health care industry in Rhode Island, beyond the money flowing through state and federal resources as part of the CARES Act, has been a major beneficiary of the Paycheck Protection Program.

The recipients include health care entities from all parts of the health care industry: primary care practices, community health centers, behavioral health and mental health agencies, medical device firms, large specialty practices organized around academic entities, nursing homes, physical therapy providers, visiting nurses, and medical supply firms – many of which received more than $1 million each in PPP loans.

The flow of the money does not diminish the valor of the front-line health care workers – the doctors, the nurses, the technicians, and the aides, all of whom have been pushed to the limit and beyond, attempting to care for the deluge of patients stricken with COVID-19. [An interesting question to ask: How many workers benefited directly from the influx of cash to the health care entities?]

For sure, there were law firms and construction firms and accounting firms and restaurants in Rhode Island who applied for and received PPP loans, some of which were eye-opening, such as the controversial private, for-profit prison, the Central Falls Detention Center, which received $2.9 million. There were also private schools, such as Moses Brown, which received $2.7 million in PPP funds.

And yes, in the midst of a public health crisis, it makes sense that health care entities would be deemed a priority – but they are not often included in the “prevailing narrative” around “small businesses” in Rhode Island.

Topping the list of recipients in health care entities receiving PPP loans were:

• Coastal Medical, Inc., $9,048,600 -- a physician-run group practice headquartered in Providence, with a focus on primary care, one of the state’s leaders in moving toward accountable care and shared savings. Coastal Medical is reportedly in the midst of merging with Lifespan, so that it will become an integral part of the merger proposed with Care New England, Lifespan, and Brown University now being negotiated. Coastal Medical received the most of any PPP recipient in Rhode Island.

• Brown Medicine, $8,460,000 – a nonprofit, academic multi-specialty group, working in partnership with Brown Physicians, Inc., Brown Dermatology, Brown Emergency Medicine, Brown Urology, The Neurology Foundation, and University Surgical Associates. [Many of these “partners” also received substantial PPP loans.]

• University Orthopedics, Inc., $7,436,700 – in East Providence, with its new facility at Kettle Point, whose slogan is “Healers, Innovators, Teachers,” is a specialty practice that operates in partnership with Brown Medicine.

• Rhode Island Medical Imaging $6,495,925 – headquartered in Warwick, the firm operates a network of 12 private medical diagnostic imagining facilities.

• Brown Emergency Medicine, $5,245,200 – a partner of Brown Medicine, whose workers are on the front lines dealing with the extraordinary onslaught of COVID-19 cases. Dr. Megan Ranney, who works for Brown Emergency Medicine, has become one of the go-to commentators on many cable news networks. [As I recall, in a response to false criticism leveled by President Trump that doctors were making more money from COVID cases, Ranney tweeted that she other physicians have had to take a pay cut.]

Other Brown Medicine “partners” that received federal PPP loans included: Brown Dermatology, $1,303,200, Providence; Brown Neurology, $1,175,200, Providence; and University Surgical Associates, Inc., $4,033,400, Rumford.

Mental and behavioral health providers
One of the largest unmet needs in Rhode Island over the last decade has been the delivery of mental health and behavioral health services, complicated by continued complaints about the low reimbursement rates from health insurers, making it difficult to maintain and to train a workforce, according to agencies.

The coronavirus pandemic has increased the demand for such services, complicated by the need to transform the delivery to telehealth platforms, in order to protect both the patients and the providers from the spread of the virus.

The list of PPP fund recipients within the health care entities included a number of agency and firms engaged in behavioral and mental health care, including:

• Community Care Alliance, $4,414,247, in Woonsocket.

• Children’s Friend and Service, $4,335,900, Providence.

Family Service of Rhode Island, $3,197,900, Providence.

Thrive Behavioral Health, $2,340,512, Warwick.

• CODAC, Inc., $1,765,055, Cranston.

A broad spectrum of providers
The recipients of PPP loans also included a broad spectrum of providers, from community health centers to physical therapy practices to one of the largest orthopedic group practices in Rhode Island. Among the recipients were:

• Orthopedics Rhode Island, $3,739,800, Warwick, which is scheduled to open its new facility in March, featuring ambulatory surgery and physical therapy.

• Blackstone Valley Community Health Care, Inc, $2,724,670, a community health center headquartered in Pawtucket, with facilities in Pawtucket and Central Falls.

• Elite Physical Therapy, Inc., $1,667,500, Warwick.

• Medical Associates of RI, Inc. $1,349,300, Bristol,

Durable medical goods and innovative medical devices
The PPP small business loans recipients also included two firms in Rhode Island that represent the full spectrum of medical goods and innovative medical devices. They included:

• Ximedica, LLC, $4,916, 382, a private, for-profit medical device firm headquartered In Providence, which has expanded its footprint in recent years to include design firms involved with wearable personal devices.

• The Claflin Company in Warwick, $2,035,500, and the Claflin Serivce Company, $3,083,000, also in Warwick.

Nursing homes and assisted care facilities
Among the nursing homes and assisted care facilities in Rhode Island receiving more than $1 million in PPP loans included:

• Cedar Crest Nursing Centre, Inc., $2,095,000, Cranston

• Riverview Nursing Home, Inc., $1,971,100, Coventry

• Pezzelli Nursing Home, Inc., $1,366,210, North Providence

• Charlesgate Nursing Center, $1,147,800, Providence

• Tockwotton Home d/b/a Tockwotton on the Waterfront, $1,164,300, East Providence

Broadening the definition of the small business narrative
What this somewhat cursory overview of Rhode Island recipients of PPP loans from the federal government, focused on firms in the health industry sector who received more than a $1 million in such loans, demonstrates is the need to change the “narrative” around small businesses in Rhode Island, to recognize the dominance of the health care sector as both an economic driver and a job creator far beyond the major health systems.

In its strategic plan, Rhode Island Innovates 2.0, published in January before the onset of the coronavirus, CommerceRI apparently overlooked the role of public health as a driver of future economic prosperity for the state – and as a job creator.

The flow of money from federal PPP loans to “small businesses” in the health care industry reveals the need to change the “narrative” around how the state talks about small businesses, particularly when it comes to health and health care, in ConvergenceRI opinion.

Further, it raises questions around sustainability in a post-COVID world when it comes to investing in consolidated health systems.

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