Delivery of Care

AG Neronha sounds the alarm

In 2026, when the $80 million escrow fund runs out, the likelihood is that the private equity owners of Roger Williams Medical Center and Fatima Hospital will shut them down

Photo by Richard Asinof

Attorney General Peter Neronha.

By Richard Asinof
Posted 2/27/23
Attorney General Peter Neronha issues a warning for the need for there to be more strategic planning about the future of health care delivery in Rhode Island, and the role that Attorney General’s office can play in developing such strategies.
What is the status of selecting a permanent director for the R.I. Department of Health? Who is in charge of developing strategic thinking around the future of health care in Rhode Island at the executive branch of government? Will David Cicilline, qs the new president and CEO of the Rhode Island Foundation, continue the strategy of convening groups of stakeholders to focus on future education and health care strategies? How committed is Gov. Dan McKee to keeping Commissioner Angelica Infante-Green on the job? How precarious are the finances of other hospitals in Rhode Island, including South County and Westerly?
As a patient, managing your own personal health care needs requires a constant diligence to make sure that connections are being made, say, between the primary care provider and the pharmacist, between the physical therapist and the surgeon, and between the health insurer and the medical imaging facility. The list of interconnections goes on and on and on, each one important in its own way, requiring attentiveness and communications skills. And the recognition that someone’s time is often as valuable as your own.
Similarly, as a reporter, arranging interviews – scheduling times through the communications director, being flexible and nimble enough to respond politely when the first scheduled time for an interview is postponed and cancelled, requires a sense of finesse, of give and take.
Sometimes it doesn’t work out when you envision having a conversation around the dinner table. One of the guests, managing a very difficult personal trauma, such as parents who are suffering from dementia, may decline an invitation, and be rude in the process of declining to speak. Not everyone is willing to engage in conversations, and just because it is timely for you, doesn’t make it timely for them.
Once on assignment with WGBH-TV with a camera crew in northwestern Quebec, on an extremely difficult shooting schedule, the chief of the Waswanapi Cree, Peter Gull, fell sick with laryngitis. As a result, no one else in the tribe was authorized to speak – and the camera crew waited and waited on a promontory point for more than six hours, being eaten up by black flies, because no one would talk with us.
No matter that the crew had driven more than 1,000 miles over three days to make the shoot happen – it didn’t matter.


PROVIDENCE – Last week, Attorney General Peter Neronha spent more than an hour sharing his worries with ConvergenceRI about future for health care delivery in Rhode Island. The prognosis does not look good.

In his direct, truth-telling fashion, Neronha identified what he saw as the troublesome trends and symptoms:

• A dire lack of primary care providers, rendering the metrics of high numbers of people with health insurance coverage meaningless.

• The growing financial instability of hospital finances, related to disparities in the payer mix, caused in part by an increasing dependence on low-paying public heath insurance plans.

• The structural problems of private equity financing of hospitals, where profit, not patient outcomes, drives investments.

• The lack of regulatory oversight of the health care industry, in particular hospitals, outside of transactional consolidations and mergers, making solutions difficult to achieve, given the lack of transparency around financial numbers.

Neronha predicted that he thought it was likely the private equity owners of Roger Williams Medical Center and Fatima Hospital would shut down the facilities in 2026, three years from now, once the $80 million escrow account had been depleted.

Neronha said that his office, moving forward, was making plans to develop greater capacity in health care expertise, to be able to step forward into the vacuum created by the failure of the state’s executive branch to make plans for the future of health care delivery in Rhode Island.

Here is the ConvergenceRI interview with Attorney General Peter Neronha, the kind of conversation that demonstrates the value of ConvergenceRI’s willingness to engage in in-depth reporting on health care delivery that is often missing from so much of the news coverage today.

ConvergenceRI: I’m glad that we are finally sitting down, because there is a lot to talk about.
NERONHA: There is.

ConvergenceRI: Why don’t you begin, sharing what you are working on now, that you think should be brought to the forefront of our discussion.
NERONHA: One of the things that concerns me about health care is looking at the underlying challenges that we face here in Rhode Island. If you look at health care, in my view, in Rhode Island, if you look at some of the metrics, they will tell you that we are doing pretty well.

ConvergenceRI: Which metrics?
NERONHA: For example, we have a lot of people here, most of our population, who are insured. We have high rates of people who are covered by health insurance. And, that is a good thing, I suppose.

But, one of the underlying problems is: it’s all well and good to be insured, but if you can’t find a doctor, what good is it to have insurance? If there is an insufficient supply of primary care providers, doctors and others who provide primary care, what good is it to have insurance?

It’s great that everyone has insurance. But, if a hospital is financially unstable, again, what good is it to have insurance, if, in the long run, our hospitals are endangered?

So, I see at least two underlying problems in health care that we need to address: One of them is primary care – the shortage [of providers] is a problem.

We are not evaluating why we have this problem. We are not looking for solutions as to how to solve it. So, that is problem number one.

Problem number two is the state of hospitals. We don’t have good insights as regulators into the financial health of hospitals. We only see [the numbers] in the context of transactions.

And so, in that context, I have seen [the numbers] twice: In the context of our review of the merger [between Lifespan and Care New England], and in the context of the change in the ownership of Fatima and Roger Williams hospitals, when Prospect’s parent company wanted to change who owned those hospitals, along with 15 other hospitals that Prospect owned around the country.

And so, looking through that lens, being inside the books of those hospitals, what we found, as I said at the time, was that those hospitals are running in the red every single year.

And, the only thing that keeps them going is the health of the parent company [and its willingness] to invest in them – [whether they were] willing to keep them going, willing to meet the bottom line, to pay the operating expenses, to make the necessary capital investments.

We were not confident, during that change of ownership that we looked into when it happened. Which is why we put $80 million into escrow.

But what happens when the five years, which we were able to regulate for, are over? What happens in 2026?

What could happen, and what is happening around the country, is that those hospitals are closing. Most recently, one closed in Pennsylvania in Delaware County. CBS News came up here to interview me about that. People were relying on that hospital one day, and couldn’t rely on it the next.

And so, there are two hospitals, Roger Williams and Fatima, that I believe are important to people in the state of Rhode Island, that I know are going to be in real trouble when that $80 million in escrow isn’t there any longer to ensure continued investment in those hospitals.

So, [the question is]: How do you solve for that? What are the underlying problems of those hospitals? Why can’t they meet the bottom line?

Part of it is that their payer mix is mostly over 50 percent public payer – at least it was when we looked at it a couple of years ago.

So, if the reimbursements for Medicaid and Medicare are too low, OK, and perhaps the reimbursements for private health insurance are low, too, how do we fix that so that those hospitals survive, if we believe that we need those hospitals.

The need for strategic health care thinking
That’s the kind of strategic health care thinking that I don’t believe is going on in Rhode Island. And, it needs to happen.

ConvergenceRI: Who is positioned to do that? To some extent, is the problem because the legislature, no offense to the legislative leaders, has been absent?
NERONHA: I think it needs to exist in the executive branch, in a perfect world, Richard. I think the R.I Department of Health, which has done a really strong job in handling the COVID crisis.

But I think we’re, whether it be the Department of Health or elsewhere in the executive branch, it’s where this [function] really should live, in my view.

And, I don’t have any insight into whether it is happening there, but my strong suspicion is that it’s not, and it needs to.

What we’ve started to do here is to try to understand our health care system better.

And, to understand it, not from the perspective of people who have an interest in it, right, but to understand from the perspective of people who don’t.

When I say interest, I mean, an interest that might shade the information that we are getting. I’m interested in an objective analysis of what our health care system issues are.

I see at least two of them, and I’ve articulated them to you. There are probably others, and, of course, it’s important to come up with solutions.

Here, in the [Attorney General’s] office, we’ve begun, we have a health care advocate, who, along with other members of our team, are starting to think about health care strategically.

So, what does that look like? We started to talk to people who don’t have an interest, by interest, I mean, it’s not that they don’t have an interest in health care, but they don’t have a vested interest in the system.

You know, hospitals come at it in a certain way; non-hospital providers come at it in a certain way; insurance companies come at it in a certain way, and so, we’re trying to divorce ourselves, as best we can, from other interests, to really understand it.

And, hopefully, in the long run, perhaps propose solutions, if we can get there.

That’s not what this office is built to do. Right? We don’t really have… we have a health care team that deals with transactions, but not with strategic thinking.

But its absence elsewhere in the state, in state government, is causing us to begin to go down this road, and we’ll see how far we can get.

ConvergenceRI: One potential lever – and I believe I may have raised it with you before in our discussions, is the fact that the Medicaid reimbursement system is totally broken, in my opinion.

With the end of the federal COVID emergency [on May 11], you’ll have the recertification of all the people on Medicaid. The last figure I’ve heard is that there are some 350,000 Rhode Islanders on Medicaid, it could be a little less, it could be a little more, there is always a certain amount of churn that happens every month.

And, the estimates are that anywhere from 50,000 to 60,000 people will lose their eligibility for Medicaid health insurance.
NERONHA: Or, they will be able to get insurance still, but won’t have the information they need to get it.

ConvergenceRI: And, how long will it last? To move to transition people off Medicaid, to private insurance, the Governor has apparently chosen Deloitte to manage that process [in collaboration with DHS].

They don’t have the best track record, given their experience with UHIP, as far as I am concerned.

And, the McKee administration is supposedly planning to give people two months of private health insurance.

But, as you said yourself, what good is private health insurance if you can’t access the care that you need.
NERONHA: Correct.

ConvergenceRI: The other part that is going on is a very complicated re-procurement process for the contracts with the Managed Care Organizations. What’s really needed, in my opinion, is an audit, of the money that is flowing to the MCOs. The contract is said to be worth some $7 billion over five years.

My guess is that there is some legal leverage there. The procurement has been postponed, to either 2024 or to 2025, from what I’ve heard from my sources. I believe that there are five potential bidders: Blue Cross and Blue Shield of Rhode Island, UnitedHealthcare, Molina Health, Commonwealth Care Alliance, and Point32Health [formerly Tufts Health Plan].

It’s a contract for five years that is worth approximately $7 billion. How does it work? Who profits?
NERONHA: I think this is part of the overall goal of really understanding how our health care system works, and being strategic about where we are going, moving forward. To me, there are at least two ticking time bombs; there may be others.

One is the absence of primary care providers, an exodus of primary care providers. You need to have the capability to fill the gap. There is no question that tit is happening in Rhode Island. Some of it is anecdotal, but the reality is, when Coastal Medical makes 12 offers for new primary care physicians, and none of them take the job, because they are going to Connecticut and Massachusetts…

ConvergenceRI: That’s because they are following the money. follow the money….
NERONHA: Look, I have a son in medical school. You know, he’s fortunate, he’s not going to have debt when he gets out of school.

But many of them do, to think that money doesn’t matter is being naïve.

And so, we need to understand why we are losing primary care doctors. If you can’t find one, it’s not the doctor’s fault. It’s that we don’t have enough of them. And so, we need to solve for that problem.

ConvergenceRI: Within that context, is there a potential handle or leverage that you see, for the AG’s office?
NERONHA: We have leverage in the context of transactions. And that provides us with information. Elsewhere, it’s a bully pulpit. In my perfect world, Richard, we would come to a place where we would understand our health care system, and where we see the problems, to be able to propose solutions. Whether we can get there, I don’t know yet. But that is what we’re endeavoring to do. To understand these problems.

I know that there are at least two that we have to solve for. We have to solve for primary care, and we have to understand and have better insight into our hospitals. And, in respect to at least two of them, we know that tin 2026, that’s when the rubber meets the road. That’s when there is no more support guaranteed by this office for two hospitals that serve Rhode Islanders that have no endowment.

And, at that point, and unless something changes in terms of ownership, that ownership does not have a track record of keeping hospitals open. They are closing hospitals around the country. What are we doing to do at that point? When those hospitals can’t meet the bottom line. Where are they going to go to stay open?

[I predict] that they are going to go to the General Assembly for money. They will have no other choice if they want to stay open. I don’t believe that those owners are going to invest money in those hospitals to keep them afloat. I don’t believe that. They haven’t done it elsewhere in the country.

That’s coming. So, we can sit back and say: Things are OK in health care. [Not you, Richard.] We can say that things are OK in health care because everybody’s covered, and pretend that the day of reckoning is not coming. And, when it arrives, what is our plan to deal with it?

Right now, I don’t believe that is one, and I don’t believe that those hospitals are unique.

In PART Two, Attorney General Peter Neronha discusses the opportunities for his office to become more involved in connecting the climate change agenda to health issues and the pending gas docket.

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