Rhode Island Department of Health

Decision for Approval with Conditions from the Director of Health

With Respect to the Application for the Elimination of Inpatient Obstetric Labor and Delivery Services at Memorial Hospital of Rhode Island

Nicole Alexander-Scott, MD, MPH Director of Health May 27, 2016

Table of Contents PURPOSE AND BACKGROUND ..................................................................................................................... 1 LEGAL AUTHORITY ........................................................................................................................................ 1 MHRI’S PLAN FOR ELIMINATION OF INPATIENT OBSTETRICAL SERVICES .................................................. 2 PUBLIC MESSAGING BY CNE AND THE DEPARTMENT’S RESPONSE ........................................................... 3 REVIEW PROCESS ......................................................................................................................................... 5 PUBLIC COMMENT ....................................................................................................................................... 6 PRIOR HOSPITAL CONVERSION DECISION ................................................................................................. 12 UNAP PETITION FOR A DECLARATORY RULING ........................................................................................ 13 CONSIDERATION OF REGULATORY CRITERIA ............................................................................................ 15 TRADITIONALLY UNDERSERVED ......................................................................................................... 15 ACCESS ................................................................................................................................................. 17 PROVISIONS FOR EMERGENCY TRANSFER ......................................................................................... 18 IMPACT ON PROVIDERS AND STAFF................................................................................................... 19 FINANCIAL CIRCUMSTANCES OF MHRI AND CNE .............................................................................. 20 FINANCIAL IMPACT UPON PATIENTS ................................................................................................. 21 FINDINGS .................................................................................................................................................... 23 DECISION WITH CONDITIONS .................................................................................................................... 26 Appendix “A” .............................................................................................................................................. 29

i

DECISION FOR APPROVAL WITH CONDITIONS FROM THE DIRECTOR OF THE RHODE ISLAND DEPARTMENT OF HEALTH WITH RESPECT TO THE APPLICATION FOR THE ELIMINATION OF INPATIENT OBSTETRIC LABOR AND DELIVERY SERVICES AT MEMORIAL HOSPITAL OF RHODE ISLAND PURPOSE AND BACKGROUND The purpose of this document is to render the Decision for Approval with Conditions of the Director of the Rhode Island Department of Health (“Department”) with respect to the application for the elimination of obstetric labor and delivery services at Memorial Hospital of Rhode Island (“MHRI”). MHRI, whose parent entity is the Care New England Healthcare System (“CNE”), is a 294-bed not-forprofit hospital located at 111 Brewster Street in Pawtucket, Rhode Island. The instant proposal strictly relates to MHRI’s plan to eliminate obstetric labor and delivery services on a date certain after regulatory review and approvals are obtained from the Director of Health (“Director”). Only the obstetric inpatient service is proposed to be eliminated in the application; all prenatal/ postnatal care will remain in place at MHRI. MHRI’s primary service area includes the communities of Pawtucket, Central Falls, Cumberland, Lincoln, and East Providence; as well as the neighboring Massachusetts communities of Attleboro, North Attleboro, Seekonk, and Plainville. MHRI has offered labor and delivery services since 1931. MHRI represented to the Department that it is unable to continue to offer obstetric labor and delivery services due to financial losses at MHRI, that the low volume of births creates patient safety concerns at MHRI, and that this volume of MHRI births can be accommodated at either Women & Infants (“W & I”) or Kent Hospitals, both of which are part of the CNE system. LEGAL AUTHORITY The Director’s decision-making authority is granted in RIGL 23-17.14-18 (“Prior approval – Closings or Significant Reduction of Medical Services“), RIGL 23-1-1 (“General Functions of Department“), and Section 10.0 (“Elimination or Reduction in Emergency Department and Primary Care Services”) of the Rules and Regulations Pertaining to Hospital Conversions (“Hospital Conversions Regulations”). The purpose of the law (Hospital Conversions Act RIGL 23-17.14-3) is set forth as follows: (1) (2)

(3) (4)

(5)

Assure the viability of a safe, accessible and affordable healthcare system (emphasis added) that is available to all of the citizens of the state; To establish a process to review whether for-profit hospitals will maintain, enhance, or disrupt the delivery of healthcare in the state and to monitor hospital performance to assure that standards for community benefits continue to be met; To establish a review process and criteria for review of hospital conversions; To clarify the jurisdiction and the authority of the Department of Health to protect public health and welfare (emphasis added) and the department of attorney general to preserve and protect public and charitable assets in reviewing both hospital conversions which involve for-profit corporations and hospital conversions which include only not-for-profit corporations; and To provide for independent foundations to hold and distribute proceeds of hospital conversions consistent with the acquiree's original purpose or for the support and promotion of health care and social needs in the affected community.

1

In addition to setting forth a review process for hospital conversions or mergers, the regulations promulgated under the Hospital Conversions Act set forth provisions related to charity care, community benefits, and the elimination or reduction in emergency department and primary care services. Section 10.1 of the Hospital Conversions Regulations requires that: “No hospital emergency department or primary care services which existed for at least one (1) year and which significantly serve uninsured or underinsured individuals shall be eliminated or significantly reduced without the prior approval of the Director in accordance with section 23-17.14-18 of the Rhode Island General Laws, as amended." Section 1.29 of the Hospital Conversions Regulations defines “primary care services” as “the provision of integrated, accessible health care services by clinicians who are accountable for addressing a large majority of personal health care needs, developing a sustained partnership with patients, and practicing in the context of family and community. In most instances, primary care is focused on the point at which a patient first seeks assistance from the health care system for non-emergency services. Primary care services include, but are not limited to, such services as family practice, pediatrics, internal medicine, obstetrics/gynecology, and mental health services.” (Emphasis added). The Department takes cognizance of the fact that an obstetrics patient is treated along a continuum of care that begins when she first seeks assistance from the health care system and may conclude in the post-natal period. MHRI’S PLAN FOR ELIMINATION OF INPATIENT OBSTETRICAL SERVICES As required by the Hospital Conversions Act (and its related regulations) and as outlined above, MHRI submitted a plan on March 2, 2016 to the Department to eliminate its inpatient obstetrical service “at the earliest opportunity.” The three-page plan contained information required by Section 10.1.2 of the Hospital Conversions Regulations:         

A description of the services to be reduced or eliminated; The proposed change in hours of operation, if any; The proposed changes in staffing, if any; The documented length of time the services to be reduced or eliminated have been available at the facility; The number of patients utilizing those services that are to be reduced or eliminated annually during the most recent three (3) years; Aggregate data delineating the insurance status of the individuals served by the facility during the most recent three (3) years; Data describing the insurance status of those individuals utilizing those services that are to be reduced or eliminated annually during the most recent three (3) years; The geographical area for which the facility provides services; Identification and description, including supporting data and statistical analyses, of the impact of the proposed elimination or reduction on: 1) access to health care services for traditionally underserved populations, including but not limited to, Medicaid, uninsured and underinsured patients, and racial and ethnic minority populations;

2

2) the delivery of such services on the affected community: emergency and/or primary care in the cities and towns whose residents are regularly served by the hospital (the “affected” cities and towns); 3) other licensed hospitals or health care providers in the affected community or cities and towns; and, 4) other licensed hospitals or health care providers in the state; and, 

Such other information as the Director deems necessary.

In accordance with Section 10.1.4 of the Hospital Conversions Regulations, the Department must deem the plan complete and acceptable for review before the 90-day review period begins. Finding the aforementioned plan to be lacking in sufficient detail, the Department sent a letter to MHRI on March 9, 2016 requesting additional information. In a March 14, 2016 ten-page response, Dr. Michael Dacey, President of MHRI, provided additional information to the Department, but not in sufficient detail so as to be deemed complete and acceptable for review by the Department. The Department sent another series of questions to Dr. Dacey on March 28, 2016 in order to gain a thorough understanding of the proposed elimination of inpatient obstetrical services at MHRI. On April 7, 2016 Dr. Dacey responded in writing to the March 28th series of questions. PUBLIC MESSAGING BY CNE AND THE DEPARTMENT’S RESPONSE Prior to the MHRI plan being submitted to the Department on March 2, 2016, Dennis D. Keefe, President and CEO of CNE, on or about February 29, 2016, sent a communication to his CNE staff detailing plans for “Memorial restructuring.” While this communication was not transmitted to the Department, it subsequently appeared in broadcast media. (The Department subsequently received a copy of this communication from CNE as an attachment to its April 7, 2016 written communication). The Department also became cognizant of additional actions purportedly taken by CNE in advance of regulatory review and/or approval by the Director. Among the reported actions:1 1. Prior to any submission to the Director, on or about February 23, 2016, providers were told by CNE that they were to forward their obstetrical patient’s (sic) medical records to Woman (sic) & Infants Hospital (“W & I”) and that CNE would be drafting letters to said patients informing them that they would have to deliver at W & I. 2. On or about March 1, 2016, subsequent to the public announcement regarding the elimination of services and prior to any submission to the Director, MHRI staff were informed that the last patient for obstetrics services would be admitted on March 10, 2016 and the floor would be closed on March 14, 2016. 3. On or about March 3, 2016, staff were informed that the last patient would be admitted on March 14, 2016 and the floor would close on March 17, 2016. 4. On or about March 4, 2016, staff were informed that the floor would close on March 18, 2016. 5. On or about March 5, 2016, staff were informed that the last patient would be admitted on March 16, 2016. 1

See: In the matter of: Memorial Hospital of Rhode Island Petition for Declaratory Ruling. Filed by Christopher Callaci, Esq. and W. Mark Russo, Esq., Attorneys for the United Nurses and Allied Health Professionals (UNAP), dated March 11, 2016, pp 7 - 8.

3

6. MHRI staff employed in the obstetrical services unit were informed that based upon the closure date of March 14, 2016, they would receive layoff notices on March 7, 2016. In order to minimize confusion for affected patients and the MHRI workforce, on March 7, 2016, the Department issued a “cease and desist letter” that required: Memorial’s inpatient obstetrical service must remain open, fully staffed, providing specialty obstetrical care in a routine manner, meeting all applicable state and federal statutes and regulations until such time as the Director of Health issues a final decision on Memorial’s plan to cease providing this primary care service. In response to the public confusion occasioned by CNE, on March 23, 2016 the Department sent a letter to Dr. Dacey and Mr. Keefe requesting a comprehensive plan that would describe in detail the entire scope of changes in clinical services planned throughout the CNE system. The Department sought to avoid the piecemeal review of each regulatory request and to place the elimination of the inpatient obstetrical services at MHRI within the context of broader regulatory changes throughout the CNE system. It was requested that the plan contain a detailed description of all affected hospitals’ changes in clinical services, including all applicable timelines. Among other items requested: 1/ current financial information for CNE corporate and each CNE hospital required to be disclosed pursuant to RIGL Section 23-17.14-12.1(g) for each fiscal year 2013, 2014 and 2015; and 2/ projected financial information for CNE corporate and each CNE hospital for fiscal years 2016, 2017, and 2018. On March 28, 2016 Dr. Dacey submitted a six-page letter (including one page of financial information) in response to the Department’s March 23rd request. Included in Dr. Dacey’s letter of March 28, 2016 was his statement that “…these plans do not involve changes to services offered at CNE’s other hospitals….Therefore, there is no expectation that regulatory applications will be required beyond those that have already been filed with respect to the inpatient obstetrics unit at Memorial.” While most of Dr. Dacey’s responses narrowly referred to the elimination of the MHRI inpatient obstetrics service, the plan for the entirety of MHRI was broadly described as follows: The model for restructuring that has now been put forward includes the following: 1. 2.

Continuation of the full service emergency department, operating 24/7 10 bed observation unit to support that emergency department, for medicalsurgical patients with short expected lengths of stay 3. 8 bed inpatient orthopedic surgery unit 4. Continuation of full outpatient surgery offerings 5. Continuation of all present outpatient primary care clinics, including primary care clinics in both family medicine and internal medicine 6. Continuation of all current outpatient specialty clinics, including cardiology and pulmonary medicine 7. Inpatient rehabilitation unit with capacity up to 20 beds 8. Continuation of the cancer center with both outpatient oncology clinics and infusion unit 9. Continuation of pre- and post-natal clinical care 10. Continuation of the neurodevelopmental center 11. Continuation of outpatient laboratory services 4

12. Continuation of diagnostic imaging services 13. Enhanced transportation services for patients requiring transport to and from the Memorial campus 14. Delicensure of up to 150 beds Through the February 29, 2016 communication to its staff, CNE had also announced it would consolidate and relocate MHRI medical – surgical and intensive care unit (ICU) beds to Kent Hospital. To provide a level of certainty about the future for MHRI obstetric patients, the Department decided to process this application specific to inpatient obstetric services at MHRI, while continuing to address the remaining components of the Comprehensive Plan. MHRI’s plan for the inpatient obstetric services was deemed complete and accepted for review on April 22, 2016. The 90-day review period commenced on April 22, 2016. The Department remains concerned about the changes proposed by MHRI, such as the elimination of its medical–surgical units while maintaining a fully functioning emergency department. Additionally, the Department remains concerned that these proposed changes include maintaining a 10-bed “observation unit” and a fully functioning inpatient orthopedic surgery unit while eliminating its on-site intensive care unit. Due to these concerns, these matters will continue to be reviewed by the Department. Thus, this Decision applies exclusively to the inpatient obstetric labor and delivery services provided at MHRI. Finally, nothing in this Decision shall be interpreted to mean that the Department has determined that any other elements contained in CNE’s model for restructuring are in conformity with the community standard of care and comply with all applicable statutes and regulations. REVIEW PROCESS In accordance with Section 10.1.3 of the Hospital Conversions Regulations, the Director must “determine based upon the public interest in light of attendant circumstances whether the services affected by the proposed elimination or reduction significantly serve uninsured and/or underinsured individuals.” The Director determined that the inpatient obstetric services at MHRI significantly serve uninsured and/or underinsured individuals, triggering review of the plan by Department staff. Section 10.1.4 of the Hospital Conversions Regulations further provides that “……the Director shall have the sole authority to review all plans submitted under this section…” The decision of the Director must be issued within 90 days of the receipt of a completed plan or the plan is automatically approved. A public comment period is permitted but is not required.

5

PUBLIC COMMENT Initially, opportunity to provide comments was offered in the form of three public meetings and submission of written comments by March 25, 2016. Public meetings were convened as follows: Pawtucket Location

Pawtucket Location

Central Falls Location

Date

Monday, March 14, 2016

Wednesday, March 16, 2016

Thursday, March 17, 2016

Time

5:00 p.m. – 7:00 p.m.

11:00 a.m. – 1:00 p.m.

4:00 p.m. – 6:00 p.m.

Location

Goff Junior High School 974 Newport Avenue Pawtucket, RI 02861

Woodlawn Community Center 210 West Avenue Pawtucket, RI 02860

Segue Institute for Learning 325 Cowden Street Central Falls, RI 02863

The first public meeting at Goff Junior High School in Pawtucket on Monday, March 14, 2016 was the most well-attended of all three meetings, with no less than 128 persons present. Twenty-five attendees made comments to Director Nicole Alexander-Scott, MD, MPH, and other Department staff. Dr. Angelleen Peters-Lewis, Chief Nursing Officer of CNE, began with a presentation on CNE’s rationale for eliminating the inpatient obstetrical services. She stated, in part: We really realize that this is a highly charged and sensitive and emotional issue for the staff of the Memorial birthing center and our patients’ families and the community that we serve, and that’s why the proposal that we make to you was after careful deliberation and thoughtful consideration. There is nothing that we would want more than to keep the services as they currently exist at Memorial Hospital. But to do so would ignore the realities of our current health care environment, both statewide and national as well as the financial challenges that we face as a health care system. … First and foremost, we’d like to be clear that in spite of the financial losses that we’ve experienced, it remains our goal to keep a strong, viable but restructured Memorial Hospital alive and well in the Pawtucket community, serving the communities that we pledged to serve. … We know that safe child birth occurs within the context of the team that includes nurses, physicians, anesthesiologists, and most importantly fully trained obstetrical providers and 24/7 anesthesia coverage. While all these services and support do not currently exist at Memorial Hospital, they do exist within the Care New England system. If we reflect on the size of our state, we know that there are --- is an excess of obstetrical beds and within 15 miles, there are several obstetrical services. So the choice for us wrapped in the health care reform and new health care environment and our commitment to patient safety, the choice for us was apparent, maintain the emergency room and other valuable primary care services and relocate our obstetrical program to Women & Infants, a national center of excellence, as

6

well as Kent Hospital, which is known for its warm and personal women’s care unit.2 Of the 24 remaining speakers, only one, Mr. Arthur DeBlois, former trustee and former interim CEO of MHRI from May 2012 – October 2013, spoke in favor of MHRI’s proposal to eliminate the birthing service. His remarks, in part: Memorial has struggled financially for many years, and both its current and former leadership on both the administrative side as well as the medical people, the physicians, nurses, have struggled mightily to turn it around. The simple fact of the matter is it hasn’t worked. Eighty-five percent of the people in the service area of Memorial already go to another hospital. We haven’t been able to change that. So we have to recognize reality, and the reality is that, as the number of births performed go down, quality of that care is threatened because medicine is a practice. You have to practice it. You have to have enough patients to be able to practice it. Secondly, the hospital is in serious financial condition. We must make some difficult decisions. The quality of the care that people receive at other hospitals like Women & Infants and Kent is very good. If we don’t make a change, if we can’t make a good decision here, I feel we would face possibly losing the entire institution, and then you’ve really got a community without health care. So we have to make some difficult decisions, and I believe the decision that has been made, very courageously I might add, by the people who run the hospital currently is the right decision.3 The remaining 23 speakers were all in opposition to MHRI’s proposal. Some were speaking, often in emotional terms, of their personal experiences at MHRI. Others spoke of their professional experiences, being employed at MHRI. One example: …I’m speaking before you as a registered nurse who has been working on the obstetrical unit at Memorial Hospital for the past ten years. One of the most important responsibilities of a nurse is to serve as a patient advocate, and I am here today to advocate for my patients. It’s well known that Memorial is entirely supportive of physiologic births. Many of our patients travel from across the state and from neighboring states to deliver with us. Many of our nurses are trained as doulas. Our practitioners, in addition to the excellent clinicians, trust women and trust birth. I’m sure you will hear that from the mothers and doulas who are here today. Memorial is important to the local birth community and significant, but what I’m here to address is Memorial’s worth to Pawtucket and Central Falls.

2

See: Proceeding at Hearing in RE: Application to Eliminate Inpatient Obstetrical Services at Memorial Hospital of Rhode Island, March 14, 2016 transcript at pp 6 – 9. 3

Id. at pp 33 – 34.

7

These are not wealthy communities. Nearly half of our patients qualify for Medicaid and many do not have access to private vehicles or reliable transportation. It is not uncommon for our patients to walk to the hospital. I believe that Michael Dacey’s claim that no impact is expected on access to health services for traditionally underserved populations is completely wrong. If you remove health care services from an impoverished-reliant community, you will affect access. That’s common sense.4 Another excerpt from a patient’s comments at the March 14, 2016 public meeting: … Memorial is where you get the experience you need whether you’ve got issues going on or you’re having the perfect pregnancy, and it serves so many different people in so many different capacities, it would be a tragedy to lose a place that will no longer be able to serve people that want just, I don’t care what it is, just get me in and get my baby to me or someone who has a specific birth plan of people of all ages without judgment, without reservation, with some of the most knowledgeable people that you can find. I had a gentle Cesarean. 5 Two of the doctors that work there, they brought it to this country and they pioneered this wonderful program. It will get lost if Memorial is gone. Being able to know that even in a major surgery, having a Cesarean section is not a small thing, and the six weeks that it takes to recover, they checked in on me all the time. I need to know that my doctors and my nurses are going to be there, and I know I’ll get that at Memorial.6 The second public meeting at the Woodlawn Community Center in Pawtucket on Wednesday, March 16, 2016 during the lunch hour was also well-attended, with no less than 85 persons present. Approximately 29 attendees made comments to Director Nicole Alexander-Scott, MD, MPH and other Department staff. In attendance were health care providers, parents, children, community advocates, and pregnant MHRI patients. Excerpts of the public comments appear below: The potential closing of Memorial Hospital is of great concern to me both professionally and personally. Professionally I’m a local doula and the copresident of Doulas of Rhode Island. I have seen birth from the inside of Memorial while supporting many clients there. There has been talk of Memorial not being labeled a quality care facility because they do not see the high numbers and is constantly compared to Women and Infants in terms of revenue. I can speak directly to the quality of care because I have seen it. As a doula, I am there witnessing every single thing that occurs while any clients are in labor and immediately following their birth. Women and their families are respected at Memorial. Plain and simple. Can you imagine being prepared to be on the 4

Id. at pp 46 – 47.

5

Among other characteristics, gentle C-section protocols may include clear plastic drapes so the delivering mother can see the baby being born. The mother and baby also have immediate bonding and skin-to-skin contact in the operating room. 6

Id. at pp 55 – 56.

8

operating table for a Cesarean birth and having a doctor tell you that your baby will be taken away, and you will be in the operating room without support. Neither do the care providers in Memorial. They work to ensure that women experiencing Cesarean birth can opt for the ground-breaking gentle Cesarean without question. This is not an option consistently at Care New England Women and Infants and Kent Hospitals. It is advertised as an option at Women and Infants but the providers do not consistently stand behind the practice. I have had several clients request gentle Cesareans and told no outright.7 A representative of “Merger Watch”, a non-profit organization dedicated to protecting patients’ access to care when hospitals merge stated the following: There has to be a way forward to solve all of these pressures that the hospitals around the nation are facing that does not disadvantage women as they seek care for the most natural human event. Instead of closing a department so vital to these communities, the State should implement more comprehensible health planning to determine the needs of each community and to not put the burden of these changes on one individual population. So, as the Department moves forward, please consider the voices of all of these families, the surrounding communities, outsiders like me who will be impacted by these changes and ensure that the wonderful, unique, high-quality labor and delivery services at Memorial Hospital are not lost.8 All 29 speakers at this meeting were in opposition to MHRI’s proposal. The third public meeting at the Segue Institute for Learning in Central Falls took place on Thursday, March 17, 2016 at 4:00 p.m. It was the second most well-attended of the three public meetings, with no less than 95 persons present. Approximately 30 attendees made comments to Director Nicole Alexander-Scott, MD, MPH, and other Department staff, in a forum that lasted over two and one-half hours. Among the speakers at this final forum were the Mayor of Central Falls, the Honorable James Diossa; Dr. Angelleen Peters-Lewis, Chief Nursing Officer of the CNE system; and Christopher Callaci, Esq., legal counsel for the United Nurses and Allied Health Professionals union (UNAP). Dr. Angelleen Peters-Lewis, who also spoke at the March 14, 2016 public meeting, spoke of her experience in caring for underserved women: So, we have a long history of caring for underserved women. In fact, half of the patients served at Women and Infants are recipients of Medicaid. We have cared for these women with a long history of dignity, respect and most importantly equitable and quality care. And that’s not to say that this is not provided at Memorial, but this is the commitment of Women and Infants Hospital. So, what cannot be lost is it takes a significant amount of resources to do this and to do 7

See: Proceeding at Hearing in RE: Application to Eliminate Inpatient Obstetrical Services at Memorial Hospital of Rhode Island, March 16, 2016 transcript at pp 26 – 27. 8

Id. at pp 34 – 35.

9

this well; and so, in these economic times, it’s hard to duplicate all of the infrastructure required to care for the underserved well. So, we believe we already have that infrastructure within Women and Infants Hospital, and we are prepared to care very well for the women of Pawtucket.9 Mayor Diossa stated the following: Memorial is a health care provider of the highest order and serves many patients for a variety of services. Interruption of the services would negatively affect the community. I respect the position of the hospital, but it is my request, I ask you that you work with DOH and local communities in Central Falls to mitigate any public safety issues. Despite the difficult situation we are all facing, I’m here as a partner and someone who wishes to do what they can to make sure the effects of any actions are as small as possible. Thank you.10 Mr. Callaci, attorney for UNAP, asserted the following:    

The Department provided seven days advance notice of these meetings. A minimum of 30 days advance notice is required. A closure plan in a form acceptable for review by the Department was not made available to the public in advance of these meetings. CNE has violated the Hospital Conversions Act and related regulations. The Department should schedule an evidentiary hearing on an expedited basis to review the CNE violations of the HCA and related regulations. CNE violated Dr. Michael Fine’s Hospital Conversions Act Decision with Conditions of June 26, 2013.

Two CNE physicians spoke in favor of the closure of the inpatient obstetrical unit at MHRI, Drs. Jeff Borkan and Raymond Powrie. Dr. Borkan, a family physician at MHRI, made the following remarks: “So, this does not feel good, but I think that what I’m advocating is that we need to look forward and not backwards. We need to mourn what’s going on. There is a lot of pain. We need to change our identity. We need to focus on where do we go from here. I wish I could say that Memorial or places like Memorial could stay open in this state or other states. I think it’s over, and that is not a good feeling.”11 Dr. Raymond Powrie, Chief Medical Quality Officer at CNE, stated, in part, the following: When Care New England knew Memorial had great financial distress and came to join the Care New England, I was delighted because I felt like we could help. But 9

See: Proceeding at Hearing in RE: Application to Eliminate Inpatient Obstetrical Services at Memorial Hospital of Rhode Island, March 17, 2016 transcript at pp 19 – 21. 10

Id. at page 41.

11

Id. at page 49.

10

I must tell you that hospitals need numbers, operating. You can’t operate a hospital with very small numbers financially. With that, I’m sad for this change. And the people of Pawtucket and this area we serve have not been coming to this hospital. They have been making other choices, and we cannot sustain a hospital with 30 or 40 patients at a time. It is not financially possible for us. So, our best thing is to work together to make sure we can recreate some of the things here that we can cross over to Care New England, and I’m sorry for that. Thank you.12 On March 17, 2016 at the Central Falls public meeting, Department staff were presented with a paper copy of an electronic petition created on the MoveOn.org website that was electronically signed by no fewer than 3,030 persons from all around the world13 that read as follows: We urge you not to close the Birthing Center at Memorial Hospital. The Birthing Center offers families the care we seek and demand: high-quality, compassionate, and evidence-based. Furthermore, the Birthing Center provides a nationally-recognized training location for physicians focused on serving the most vulnerable populations throughout our country. In addition to the voluminous public comments described above, the Department received approximately 100 letters in opposition to CNE’s plan for elimination of inpatient obstetrics at MHRI. These letters appear on the Department’s website. Letters in support of the CNE plan were received from Dr. Michael Dacey, of CNE, and Elisabeth Howard, PhD, CNM of W & I. As noted above, the official initiation of the review of the application of MHRI to cease providing inpatient obstetric services at MHRI and relocate those services to its licensed hospital affiliates began on April 22, 2016. The Department’s administrative review began on this date and must conclude by July 21, 2016 or the plan is approved. On April 22, 2016, the Department issued another public notice seeking a second round of public comments on this matter. Written comments were requested to be sent to Department staff by May 6, 2016. In response, no less than 56 additional letters were received from parents, health care workers, and advocates, all of whom wrote in opposition to MHRI’s proposal. The Department recognizes, appreciates, and takes cognizance of the tremendous outpouring of support from MHRI patients around the world in support of the effort to maintain inpatient birthing services at MHRI.

12

Id. at pp 92 – 93.

13

Petition signers hailed from, among other locations: Singapore; Istanbul, Turkey; Anchorage, Alaska; Cape Coral, Florida; Montreal, Canada; Congenies, France; Cheltenham, Andorra; Omagh, Ireland; Chandler, Arizona; Los Angeles, California; Boulder, Colorado; Combe Martin, United Kingdom; and Makawao, Hawaii.

11

PRIOR HOSPITAL CONVERSION DECISION By way of background information, it is noteworthy to discuss the 2013 Director’s Decision with Conditions signed by then-Health Director, Dr. Michael Fine. On June 26, 2013, Dr. Fine approved the hospital conversion application of the transacting parties, the Care New England Health System, Southeastern Healthcare System, Inc., the parent company of The Memorial Hospital d/b/a Memorial Hospital of Rhode Island, subject to the representations made in the conversion application and the four conditions outlined below: 1.

The transacting parties shall implement the conversion, as detailed in the initial application, and as approved by the Director of Health.

2.

The new hospital shall comply with section 23-17.14-12.1 (g) of the Rhode Island General Laws, as amended, that requires: “Following a conversion, the new hospital shall provide on or before March 1 of each calendar year a report in a form acceptable to the Director containing all updated financial information required to be disclosed pursuant to subdivision 23-17.1412.1(b)(7).”

3.

The new hospital shall continue to enroll patients in the CurrentCare Program and continue to comply with all CurrentCare data submission requirements.

4.

Care New England shall maintain an Accreditation Council for Graduate Medical Education (ACGME) approved family medicine residency program that is substantially similar in nature, scope, and purpose to the family medicine residency program presently offered at Memorial Hospital, including all academic, medical, and research components.

The Director’s decision enabled the CNE system to acquire MHRI, subject to the representations and conditions noted above. As part of its hospital conversion application, CNE indicated in Appendix “D” (at Bates number RIDOH 0064) that it did not contemplate the elimination of any clinical services during the first three years after the formation of the new hospital. Certain specialty services, provided elsewhere in the state, would be phased out over time. It was anticipated that the services of the cardiac catheterization laboratory would be eliminated. This lab had been in operation since January 1994. In FY 2012, the lab treated 283 patients. Additionally, CNE committed to fund financial operational shortfalls at MHRI through September 30, 2016. In its hospital conversion application (at Bates number RIDOH 0007), CNE indicated the following: No cash or similar financial consideration will be paid at the closing of the Affiliation (the “Closing”). After the Closing, CNE will either (i) call, discharge, or refinance MHRI’s bond debt (approximately $11 million as of September 2012), or (ii) work with MHRI to form the most effective credit group structure, as determined by CNE. CNE will fund any operating shortfall of MHRI or its affiliates, through September 30, 2016, from CNE operating funds or other assets should CNE determine that such funding is necessary. 12

CNE estimates that the potential shortfall may be approximately $27 million to $36 million. CNE anticipates that, following September 30, 2016, it will support MHRI financially in the same manner that CNE supports its other hospital members. CNE has a relatively low debt position, and current projections indicate that implementing the Affiliation will not cause CNE to fall out of compliance with CNE’s existing financial covenants. CNE has cash on hand adequate to absorb the anticipated operating shortfall of MHRI.

UNAP PETITION FOR A DECLARATORY RULING On March 11, 2016, UNAP by its attorneys, Christopher Callaci and W. Mark Russo, filed a “Petition for Declaratory Ruling” with the Department. Citing section 18 of the Rules and Regulations Pertaining to Practices and Procedures before the Rhode Island Department of Health (R42-35-PP), UNAP sought a declaratory ruling from the Department on several issues relating to the legitimacy of considering CNE’s application to eliminate obstetric labor and delivery services as well as the process by which the application was being considered.14 On April 20, 2016, the Department by its attorney, Stephen Morris, responded in a letter to Attorneys Callaci and Russo. In relevant part, the letter stated: It is the Health Department’s interpretation of the controlling statute and regulations that the aforesaid section 18 of R42-35-PP does not provide a legal pathway to the requests for Declaratory Rulings which you have made. It is the Health Department’s interpretation that R42-35-PP does not legally support the seeking of Declaratory Rulings in proceedings which are not contested case proceedings. The proceedings with regard to the hospital’s application for the elimination of primary care services at the Memorial Hospital of Rhode Island are not in the Department’s opinion contested case proceedings under the Administrative Procedures Act. In a memorandum attached to the April 20, 2016 letter, the Department further stated that the matter of the declaratory ruling is contained in the Department’s Rules and Regulations Pertaining to Practices and Procedures before the Rhode Island Department of Health [R42-35-PP] at Section 18. However, R42-35-PP was promulgated under the authority pursuant to RIGL 42-35 (Administrative Procedures Act) and is not applicable to the Hospital Conversions Act (RIGL 23-17.14) or Section 10 of the Hospital Conversion Regulations. Further, it is the Department’s interpretation that R42-35-PP is only applicable to contested case proceedings. In order for a proceeding to be a considered a “contested case”, the governing statute or regulation must permit a hearing. Section 10 of the Hospital Conversion Regulations references a public notice and public comment period, but based on the context of these provisions, this is an informational, not adjudicatory proceeding. Thus, the Department has determined that the Hospital Conversion Act does not provide for a contested case hearing and should not be construed as a contested case proceeding. 14

See: State of Rhode Island Superior Court, United Nurses & Allied Professionals VS. The Rhode Island Department of Health. Complaint, Administrative Appeal C.A. No. PC-2016-1826 at pp 5 – 6.

13

The Department afforded UNAP the opportunity to appear and present arguments in support of its Petition for Declaratory Ruling. This opportunity was scheduled for Wednesday, April 27, 2016 at 2:30 p.m. at the Rhode Island Department of Health. The April 27, 2016 open meeting at the Department was sparsely attended. Public comments were made by UNAP attorneys, Christopher Callaci and W. Mark Russo. Gerald Goulet, counsel for CNE, also provided a public statement. The only other speaker in attendance was an MHRI physician.15 On April 26, 2016 and April 28, 2016, this matter was heard before the Rhode Island Superior Court on UNAP’s Motion to Remand for Further Administrative Proceedings. Following the April 26 th hearing, the Court stayed the release of the Department’s decision on MHRI’s application for the elimination of obstetric labor and delivery services, and remanded the matter for a decision by the Department on UNAP’s Petition for Declaratory Ruling. The Department rendered a Decision that read, in part, “Accordingly, in consideration of all of the above UNAP’s Petition for Declaratory Ruling is rejected.”16 Arguments were presented before Judge Lanphear and matter was continued April 28, 2016 for further hearing. On April 28, 2016, Judge Lanphear lifted the stay and continued the matter until Tuesday, May 3, 2016. The parties stipulated that the Director’s Decision on this matter would not be issued until on or after May 5, 2016. On Tuesday, May 3, 2016, Judge Lanphear again heard arguments from attorneys representing UNAP, CNE, and the Department, following which he issued a temporary stay and ordered the Department to refrain from issuing a Decision in this matter until further order of the Court, to which the Department objected. The matter was continued to Monday, May 9, 2016 for further hearing. On Monday, May 9, 2016 the Court heard argument on UNAP’s motion to stay, as well as to the general posture of the case. The Court found that there was little likelihood of UNAP succeeding on the merits and denied its motion to stay the Department’s decision. The Court continued the matter for decision based on the record, allowing for further papers to be filed with a deadline of 4:00 p.m. Friday, May 13, 2016. Judge Lanphear did not provide a date by which he would render a decision. UNAP filed papers with the court objecting to the Department’s motion to dismiss. On May 11, 2016 UNAP filed a motion with the Department seeking an order from the Department permitting them to intervene and participate in the pending application regarding the elimination of obstetric labor and delivery services at MHRI. On May 13, 2016 UNAP filed a motion to reconsider, requesting the Court to reconsider its decision denying UNAP’s motion to stay. On May 19, 2016, after hearing arguments from all parties, the Court denied UNAP’s motion to reconsider, reiterating its previous reasoning in denying UNAP’s motion to stay, that there is not a strong likelihood 15

See: Open Meeting in RE: United Nurses Allied Professionals Petition for Declaratory Ruling Regarding Elimination of Primary Care Services at the Memorial Hospital, April 27, 2016 transcript. 16 State of Rhode Island, Department of Health, Decision of the Director RE: Review of the Application for the Elimination of Obstetric Labor and Delivery Services at Memorial Hospital of Rhode Island (MHRI), April 27, 2016 at page 4.

14

of success on the merits of UNAP forcing the Department to conduct an evidentiary hearing regarding its petition for declaratory ruling. CONSIDERATION OF REGULATORY CRITERIA TRADITIONALLY UNDERSERVED MHRI reports that over 50% of its patient population lives in the Pawtucket, Central Falls, and Providence geographical areas. As noted above, the Director must determine whether the services affected by the proposed elimination or reduction significantly serve uninsured or underinsured individuals. Demographic data are presented below to describe a MHRI community that is traditionally underinsured and underserved. Census data17 reveal that the Pawtucket community’s estimated median household income between 2010 and 2014 was $40,578 (compared to $56,423 statewide). The Central Falls community’s estimated median household income for the same time period was $39,017. Almost a quarter (23%) of the households in Central Falls earned between $15,000 and $24,999 (in 2014 inflation-adjusted dollars). For the city of Providence, the community’s estimated median household income between 2010 and 2014 was $37,514. Additional demographic data for MHRI’s service area are presented in Table 1 below.18 Table #1: Demographic Indicators for MHRI’s Service Area, 2010 – 2014 Pawtucket

Central Falls

Providence

Rhode Island

(All numbers in this table represent percentages and cover the time period 2010 - 2014) Persons below federal poverty level

21.4%

31.7%

29.7%

14.2%

No health insurance coverage

15.0%

27.6%

18.7%

10.5%

Civilian labor force percent unemployed White

13.8%

13.6%

13.7%

9.5%

66.5%

52.9%

49.8%

81.4%

Black or African American

13.4%

10.1%

16.0%

5.7%

American Indian and Alaska Native

0.6%

0.9%

1.4%

0.6%

Asian

1.5%

0.6%

6.4%

2.9%

Persons of Hispanic or Latino Origin

19.7%

60.3%

38.1%

12.4%

Demographic Indicator

17

U.S. Census Data. “American Fact Finder.” Available on www.census.gov Accessed on April 21, 2016.

18

U.S. Census Data. “American Fact Finder.” Available on www.census.gov Accessed on April 21, 2016.

15

Access to health insurance has expanded significantly since 2014 when Rhode Island launched its health care marketplace (HealthSource RI), pursuant to the federal Affordable Care Act, and Medicaid coverage was expanded to childless adults ages 19 - 64. As a result, the percentage of persons without health insurance statewide has dropped to around five percent. Nonetheless, the data in the table above related to lack of health insurance coverage may serve as a proxy for access to health care. According to these data, almost a third of the Central Falls population (27.6%) lacked access to health care coverage during this time period. Additionally, as it relates to access to health care for traditionally underserved persons, the Department reviewed health insurance data provided by MHRI for obstetrical patients receiving services in the last three years (i.e., 2013, 2014, and 2015) as follows: Table #2: Health Insurance Coverage for MHRI Obstetric Patients, 2013 – 2015 Health Insurance Plan

2015

2014

2013

44.0% 21.7% 19.4%

43.5% 20.8% 19.3%

39.6% 20.8% 22.8%

(All numbers in this table represent percentages)

Medicaid UnitedHealth Blue Cross/Blue Shield of Rhode Island

As noted above, 44% of MHRI obstetric labor and delivery patients were enrolled in Medicaid in 2015. Accordingly, the Department observes that these services at MHRI are significantly utilized by this traditionally underserved population based on insurance status. MHRI provided demographic data to the Department on the 214 women who were in their second or third trimesters as of early March 2016. These data are presented below: Table #3: MHRI Obstetric Patients’ Race & Ethnicity, March 2016 Ethnic Group Cape Verdean Colombian Dominican Guatemalan Not Hispanic, Latino or Spanish Other Hispanic, Latino or Spanish Portuguese Puerto Rican Unavailable Totals Race Asian Black or African American Multiracial: White and Black Multiracial: White and Some Other Race Other Unknown White or Caucasian Totals

16

Total Number of Women 4 2 5 1 159 12 2 10 19 214

Percentage

Total Number of Women 4 26 3 2 19 24 136 214

Percentage

2% 1% 2% 0% 74% 6% 1% 5% 9% 100%

2% 12% 1% 1% 9% 11% 64% 100%

Of total births among these women, 64% are expected among Caucasian women, 12% of births among African-American women, while 2% of deliveries will be to Asian women. Among this cohort of pregnant women, 74% were identified as being “not of Hispanic, Latino, or Spanish” origin and 6% were of “Other Hispanic, Latino, or Spanish” origin. Combined, three-quarters (76%) of expected births at MHRI in the next few months will be among White or Black/African American women. ACCESS There are a total of six birthing hospitals in Rhode Island, including MHRI (as below). There are five other birthing hospitals in Rhode Island within 12 to 53 minutes of MHRI. Average travel times from MHRI are also displayed below: Table #4: Rhode Island Birthing Hospitals

Hospital Name and Location

Number of Obstetric Beds (Licensed / In Use)19

Annual Occupancy Rate20

Average Length of Stay (in days)21

Memorial Hospital of RI Pawtucket, RI

26 / 15

17%

2.3

Women & Infants Hospital Providence, RI

122 / 122

82%

4.422

Kent Hospital Warwick, RI

28 / 28

24%

2.9

Miles from MHRI

Travel Time from MHRI (Non-Rush Hour Estimates)

12 minutes

Landmark Medical Center Woonsocket, RI

12 / 11

10%

2.6

South County Hospital Healthcare System Wakefield, RI

11 / 11

29%

2.2

Newport Hospital Newport, RI

10 / 10

27%

2.5

6.9 16.5

21 minutes 26 minutes

22.5

36.5

43 minutes

41.4

53 minutes

CNE has provided assurances to the Department that obstetrical patients from MHRI will be accommodated at its other birthing facilities, W & I in Providence and Kent Hospital in Warwick, Rhode Island. W & I is about 12 minutes travel time from MHRI. Kent Hospital is approximately a 21-minute ride from MHRI. 19

Source: Rhode Island Department of Health, Center for Health Facilities Regulation, 2016. “In use” means the bed is available for occupancy.

20

Source: Rhode Island Department of Health, Hospital Licensure Applications, 2016. Hospital Discharge Data, Rhode Island Department of Health, Center for Health Data and Analysis, 2015 (Fiscal Year). 21

Source: Hospital Discharge Data, Rhode Island Department of Health, Center for Health Data and Analysis, 2015 (Fiscal Year).

22

Note that this number includes neonatal intensive care unit (NICU) babies whose lengths of stay are typically longer than other newborns.

17

Specifically, MHRI reported 446 births in FY 2015, while W & I had 8,948 births in FY 2015. Kent Hospital had 852 births in FY 2015. CNE represents that it will have sufficient providers and on-call coverage to deliver proper obstetrical care going forward for patients who would have chosen to deliver at MHRI. As these 446 births represent slightly more than one birth per day, it is unlikely that any of the remaining three Rhode Island non-CNE birthing hospitals would experience an influx of patients who could not be accommodated. The Department’s 2015 hospital discharge data reveal that there were 11,519 births among Rhode Island residents that occurred in Rhode Island hospitals. The majority of births in Rhode Island (78%) occurred at W & I in Providence.23 As Table #5 (below) indicates, the majority of women in the MHRI service area receive obstetrical care at W & I. Of a total 3,687 births among women who reside in Central Falls, Pawtucket, and Providence, 3,406 or 92.4% were delivered at W & I. The federally qualified health center, Blackstone Valley Community Health Center with locations in Pawtucket and Central Falls provides pre- and post-natal services and its patients deliver at W & I. Table #5: Rhode Island Births by Hospital and Mother’s Residence, 2015 City/Town Residence at time of Birth

HOME BIRTH

CENTRAL FALLS

KENT HOSPITAL

NEWPORT HOSPITAL

1

PAWTUCKET

1

14

PROVIDENCE

9

25

All Other RI Cities/Towns

17

804

Out of State / Unknown

4 31

Total

LANDMARK MEDICAL CENTER

MEMORIAL HOSPITAL

SOUTH COUNTY HOSPITAL

42 5

WOMEN & INFANTS HOSPITAL

Total

256

299

115

3

777

915

1

60

5

2373

2473

158

390

156

532

4579

6636

40

15

18

54

75

990

1196

884

178

409

427

615

8975

11519

Data Source: KIDSNET, Center for Health Data and Analysis, Rhode Island Department of Health, 2015.

PROVISIONS FOR EMERGENCY TRANSFER MHRI has developed an Emergency Medical Services (EMS) Communication/Transfer Plan for the stabilization and expeditious transfer of obstetric patients to the alternate CNE birthing hospitals (i.e., W & I and Kent Hospital). Department EMS staff reviewed this Plan and deemed it to be reasonable. Additionally, Department EMS staff will issue Advisory Notices to 100% of the first responder community in order to alert the EMS community of location changes in the provision of emergency services, as indicated.

23

Source: KIDSNET, Center for Health Data and Analysis, Rhode Island Department of Health, 2015.

18

IMPACT ON PROVIDERS AND STAFF The obstetrical unit at MHRI has been described as follows: “The unit at Memorial, because of its geographic position, the socio-economic status of the population, and its appeal to a small cohort of natural birth advocates, represents a diverse universe of patients with a diverse set of needs.”24 The MHRI birthing unit is characterized by having lower total Cesarean section (“C-section”) rates (includes elective repeats); lower primary C-section rates (first C-section for a patient); and higher vaginal births after a C-section (VBACs). See data below: Table #6: CNE Hospitals’ C-section & VBAC Percentages, 2014 – 2015 Hospital Name

Total C-section

Primary C-section

VBAC

2014 Women & Infants Kent Hospital Memorial Hospital

30.9% 33.6% 34.1%

Women & Infants Kent Hospital Memorial Hospital

30.1% 32.1% 27.1%

21.0% 21.0% 23.3%

20.6% 8.2% 22.6%

2015 19.8% 19.9% 16.4%

20.0% 11.0% 28.1%

Source: Care New England data, 2013 -2015

Five midwives are in attendance at MHRI births, three of whom do home births and transfer patients to MHRI, as indicated. Two midwives practice in community health centers and deliver patients at MHRI. Alternative birthing modalities, such as gentle C-sections, delayed cord clamping, and birthing tubs, are available to laboring women. While Kent Hospital submitted a Midwifery Service Protocol and a related Midwife Privilege Form to the Department for review, there are currently no midwives practicing inpatient obstetrics at Kent Hospital. There are currently 27 midwives at W & I who hold clinical privileges. Seventeen midwives are performing the full scope of clinical care at W & I at the present time. In 2015, there were 902 deliveries by midwives at W & I, which represented 10% of total births at W & I that year. Dr. Dacey indicated, “The mechanism for credentialing certified nurse midwives at Women & Infants, Kent, and Memorial are similar. The Memorial Hospital privileges include practices that are outside basic midwifery practice. WIH Privileging and Guidelines represent national standards of care with supplemental privileges included with specific criteria national guidelines (included as Appendix A-D in the WIH guideline).” He continued, “These mutually agreed upon guidelines ensure safety and continuity for our patients. Each hospital guideline is similar in that there must be in-hospital consulting physician

The Valley Breeze Op Ed by Dennis D. Keefe, President and CEO of CNE, “Changes at Memorial Hospital are Critical to the Delivery of Quality Health Care”, March 16, 2016. 24

19

presence, however they do not need to attend a midwifery birth unless there is a change in the patient’s risk status and indication to be present in the room.”25 CNE has indicated that the obstetrical patient volume at MHRI can be accommodated at W & I and Kent Hospital. The additional one to two patients per day will be absorbed within existing staffing ratios at these Hospitals. No significant impact is expected on other hospitals and health care providers in the state, according to CNE. A total of 20.5 FTEs will be eliminated at MHRI as part of the closure of the obstetrical inpatient unit.26 CNE reported that it will provide between seven (7) and fourteen (14) days advance notice to these employees. While there are reportedly no current obstetrical unit open positions at either W & I or Kent Hospital, CNE anticipates future openings due to a turnover rate of eight percent among 310 registered nurses.

FINANCIAL CIRCUMSTANCES OF MHRI AND CNE Throughout the record in this matter, there has been discussion of the “dire financial condition” of MHRI. The Department requested that its consultant, John S. Schibler, PhD, CPA, review the audited financial statements submitted by CNE related to the elimination of the MHRI obstetrical inpatient unit. Dr. Schibler’s findings27 appear below. 

CNE has generated positive operating margins ranging from 2.6% to 0.9% for the fiscal years 2010 through 2014. In 2015 CNE’s operating margin decreased to negative 0.2%.



CNE’s debt service coverage (DSCR) has declined from 6.6X in FY 2010 to 2.5X in FY 2015. The ratio is above the 1.20X required by CNE’s existing bond covenants for all years during the period 2010 through 2015. However, further deterioration in CNE’s operating margins increases the risk of a bond covenant violation.



CNE’s days cash on hand for the years 2010-2015 has decreased from 80 days in 2010 to 65 days in 2015, a decline of 15 days. Days cash on hand for all periods is above the required bond covenant threshold of 45 days. Further deterioration in CNE’s cash on hand increases the risk of a bond covenant violation.



CNE’s liquidity ratio, which is a broad measure of CNE’s ability to meet short-term obligations, has declined from 1.5X in 2010 to 1.3X in 2015.

25

Letter from Michael J. Dacey, MD, President, Memorial Hospital of Rhode Island to Michael K. Dexter, Chief of the Center for Health Systems Policy and Regulation, dated April 7, 2016. Response to question #16. 26

According to a March 29, 2016 communication from Dennis D. Keefe, President and CEO of CNE, an additional 58 positions were eliminated “in areas unrelated to the proposed restructuring plan.” 27

Dr. Schibler’s complete report appears in Appendix “A” herein.

20



The Net Operating Margins of Southeastern Healthcare System Inc.28 (SHS), which includes Memorial Hospital, decreased from an Operating Gain of $5.7 million in 2013 (the initial year that SHS joined CNE) to an Operating Loss of $27.7 million in 2015. Operating losses of SHS are projected to be $28.1, $21.4 and $22.6 million in years 2016, 2017 and 2018, respectively.

In light of the above findings, the Department recognizes the untenable financial circumstances faced by CNE, heightened during the period from 2013 through 2015.

Graph #1: CNE Operating Income 2010 – 2015

FINANCIAL IMPACT UPON PATIENTS In the March 28, 2016 series of questions that were sent to Dr. Dacey, the following question was posed to MHRI/CNE: Attachment “C” contained in your March 14, 2016 response identifies 214 women who are in their second or third trimesters. For each of these 214 individuals, please identify the number of these individuals who are commercially insured. For each individual, please analyze their insurance status and determine their out-of-pocket costs. Based upon this analysis, please provide an average and a range of out-ofpocket costs for women who will access obstetrical services at each of Women & Infants and Kent Hospitals, in lieu of MHRI.

28

Southeastern Healthcare System, Inc. is the parent company of The Memorial Hospital d/b/a Memorial Hospital of Rhode Island

21

In Dr. Dacey’s April 7, 2016 response to the Department, an analysis of 141 MHRI obstetric patients was provided that included the following findings: Table #7: Change in Out-of-Pocket Costs for MHRI Obstetric Patients, 2016 Change in Out-of-Pocket Costs Managed Medicaid Other Commercial  No Change  Decrease  Increase up to $1,000  Increase over $1,000 All Patients

# of Patients

% of Total Patients

$ Average

$ Range

76

54%

$0

$0

6 39 17 3 141

4% 28% 12% 2% 100%

$0 -$1,205 $682 $1,433 $214

$0 -$1,099 to -$1,287 $419 to $962 $1,187 to $1,820 -$1,287 to +$1,820

These findings suggest that 26% (or 17 out of 65) of women with commercial health insurance could experience an increase of up to $1,000 in out-of-pocket costs if transferred from MHRI to other CNE hospitals for obstetrics care, with an average increase for this group of $682 per patient. A small percentage (5% or 3 out of 65) of commercially insured patients could see an increase of over $1,000, with the average increase in out-of-pocket costs for this group being $1,433. Thirty-nine (or 60%) of the 65 commercially insured patients are estimated to realize a net savings of $1,205, if transferred to other CNE hospitals for care.

22

FINDINGS Based upon the criteria previously detailed on page 2 herein and as follows, the Department makes the following findings on the impact of MHRI’s plan for the elimination of its inpatient obstetrical unit:

Identification and description, including supporting data and statistical analyses, of the impact of the proposed elimination or reduction on: 1) Access to health care services for traditionally underserved populations, including but not limited to, Medicaid, uninsured and underinsured patients, and racial and ethnic minority populations; 2) The delivery of such services on the affected community: emergency and/or primary care in the cities and towns whose residents are regularly served by the hospital (the “affected” cities and towns); 3) Other licensed hospitals or health care providers in the affected community or cities and towns; and 4) Other licensed hospitals or health care providers in the state.

1) Access to health care services for traditionally underserved populations, including but not limited to, Medicaid, uninsured and underinsured patients, and racial and ethnic minority populations; Demographic data show MHRI’s primary service areas of Pawtucket, Central Falls, and Providence are traditionally underserved and underinsured. All three geographic areas contain a significant percentage of the population below the Federal Poverty Level, having no health insurance coverage, and higher unemployment rates compared to the averages in Rhode Island. All areas also contain a significant proportion of racial and ethnic minority populations. Based on the insurance data provided by MHRI, obstetric labor and delivery services at MHRI are considerably utilized by the traditionally underserved, with 44% enrolled in Medicaid in 2015. There are five other birthing hospitals in Rhode Island within 12 to 53 minutes of MHRI. CNE has reported that obstetrical patients from MHRI will be accommodated at its other birthing facilities, W & I in Providence (6.9 miles/ 12 minute travel time from MHRI) and Kent Hospital in Warwick (16.5 miles/ 21 minute travel time from MHRI). As indicated in Table 5 of this Decision, the majority of women in MHRI’s service area already receive obstetrical care at W & I. Of a total 3,687 births among women who reside in Central Falls, Pawtucket, and Providence, 3,406 or 92.4% were delivered at W & I in FY 2015. At the March 17th meeting Dr. Angelleen Peters-Lewis, Chief Nursing Officer of CNE, represented W & I has “a long history of caring for underserved women. In fact, half of the patients served at Women and Infants are recipients of Medicaid.” As stated, MHRI has developed an Emergency Medical Services (EMS) Communication/Transfer Plan for the stabilization and expeditious transfer of obstetric patients to the alternate CNE birthing hospitals. 23

Additionally, in the April 7, 2016 letter submitted to the Department, CNE provided a plan for an expanded shuttle transport service available to patients and their families with multiple scheduled stops at each CNE facility to provide transportation to other CNE facilities. CNE will provide this service routinely during outpatient hours of operation at other campuses and on-call outside of those service hours. CNE further stated it will make arrangements with a taxi company and provide vouchers to patients to supplement the transportation service, when necessary. Finding: The Department finds this proposal will not unduly affect access to quality, affordable obstetric health care services for traditionally underserved populations, including but not limited to, Medicaid uninsured and underinsured patients, and racial and ethnic minority populations. 2) The delivery of such services to the affected community: emergency and/or primary care in the cities and towns whose residents are regularly served by the hospital (the “affected” cities and towns); CNE represented that the low volume of births reduces quality and creates safety concerns to patients served at MHRI. As Arthur DeBlois, former trustee and former interim CEO of MHRI, stated at the March 14th meeting, “Eighty-five percent of the people in the service area of Memorial already go to another hospital. We haven’t been able to change that. So we have to recognize reality, and the reality is that, as the number of births performed go down, quality of that care is threatened because medicine is a practice. You have to practice it. You have to have enough patients to be able to practice it... The quality of the care that people receive at other hospitals like Women & Infants and Kent is very good.” CNE has represented that the volume of MHRI births can be accommodated at its other birthing facilities, W & I or Kent Hospitals. As Dr. Angelleen Peters-Lewis stated at the March 14th public meeting, “it remains [CNE’s] goal to keep a strong, viable but restructured Memorial Hospital alive and well in the Pawtucket community, serving the communities that we pledged to serve... [MHRI will] maintain the emergency room and other valuable primary care services and relocate our obstetrical program to Women & Infants, a national center of excellence, as well as Kent Hospital, which is known for its warm and personal women’s care unit.” Finding: The Department finds this proposal will not unduly impact the delivery of obstetric services on the affected community. 3) Other licensed hospitals or health care providers in the affected community or cities and towns; Currently, the majority of women in the MHRI service area receive obstetrical care at W & I. Data showed of the 3,687 births of women residing in Central Falls, Pawtucket, and Providence in FY 2015, 92.4% were delivered at W & I. W & I has 122 licensed beds with an annual occupancy rate of 82%. W & I reported 8,948 births in FY 2015. Kent Hospital has 28 licensed beds with an annual occupancy rate of 24%. Kent reported 852 births in FY 2015. MHRI reported 446 births in FY 2015, equating to one to two patients daily. CNE represented it will have sufficient providers and on-call coverage to deliver proper obstetrical care for any patients who may have delivered at MHRI. The additional one to two patients will be absorbed within existing staffing ratios at these Hospitals. 24

As previously stated, CNE has discussed the poor financial condition of MHRI and its effects on the CNE system as a whole. Based on analysis by the Department’s consultant, Dr. Schibler, CNE has reported a negative operating margin and decrease of days cash on hand in 2015. Dr. Schibler’s report notes CNE’s deteriorating Net Operating margin has been primarily driven by increasing losses at SE Healthcare System, which includes Memorial Hospital. Further deterioration in CNE’s operating margins and cash on hand increases the risk of a bond covenant violation.29 As Dr. Raymond Powrie stated At the March 17th public meeting, “Hospitals need numbers, operating. You can’t operate a hospital with very small numbers financially...and the people of Pawtucket and this area we serve have not been coming to this hospital. They have been making other choices, and we cannot sustain a hospital with 30 or 40 patients at a time. It is not financially possible for us. So, our best thing is to work together to make sure we can recreate some of the things here that we can cross over to Care New England.” Finding: The Department finds this proposal will not unduly impact the other licensed hospitals or health care providers in the affected community or cities and towns. 4) Other licensed hospitals or health care providers in the state. The remaining three Rhode Island birthing hospitals include: Landmark Medical Center (22.5 miles/ 26 minutes from MHRI), South County Hospital (36.5 miles/ 43 minutes from MHRI), and Newport Hospital (41.4 miles/ 53 minutes from MHRI). As shown in Table #4, all three hospitals report an annual occupancy rate below 29%. Based on previous analyses, it is unlikely that any of the hospitals not affiliated with CNE would experience an influx of patients who could not be accommodated. Thus, no significant impact is expected on the other hospitals and health care providers in the state. Finding: The Department finds this proposal will not unduly affect the other licensed hospitals or health care providers in the state.

29

Dr. Schibler’s complete report appears in Appendix “A” herein.

25

DECISION WITH CONDITIONS The Department has examined the application and related materials submitted by MHRI/CNE and provided due consideration of the record and the public interest in light of attendant circumstances. Accordingly, the Director hereby approves the request of MHRI/CNE to eliminate inpatient obstetric labor and delivery services at MHRI. The effective date of the approval to terminate such services is on or after Monday, August 1, 2016, subject to the conditions noted below. 1. MHRI/CNE shall implement the provisions of its “Application for the Elimination of Obstetric Labor and Delivery Services at the Memorial Hospital of Rhode Island” as detailed in its application and as further conditioned herein. 2.

Any material proposed amendments (as determined by the Director) to the “Application for the Elimination of Obstetric Labor and Delivery Services at the Memorial Hospital of Rhode Island” shall be submitted to and approved by the Director prior to implementation.

3.

MHRI/CNE shall provide continuity of care for all MHRI patients who present at W & I and Kent Hospital for obstetric care, including but not limited to the following: a) All MHRI patients’ medical records shall be readily accessible to all health care providers at W & I and Kent Hospital. b) Within seven (7) days of the date of this Decision, all obstetric patients shall be informed in writing, in English and Spanish at a minimum, when labor and delivery services will be terminated at MHRI on or after August 1, 2016. c) Said notification shall include whether the patient’s current obstetrician/gynecologist and/or midwife has privileges at W & I and/or Kent and shall further include contact information for all obstetrician/gynecologists and midwives who have clinical privileges at W & I and Kent Hospital and are accepting new patients, including Medicaid patients. d) MHRI shall provide written notification to its patients, in English and Spanish at a minimum, of the availability of language interpretation and translation services.

4.

MHRI shall execute its expanded transportation plan as contained in Dr. Michael Dacey’s April 7, 2016 letter to the Department that includes, but is not limited to, the following components:     

An expanded shuttle transport service that will be available with multiple scheduled stops at each CNE facility to provide both patients and their families transportation to CNE facilities; Ambulance services available seven (7) days per week around the clock; Shuttle services provided routinely during outpatient hours of operation at CNE campuses and on-call outside of routine service hours on an as-needed basis; Preferred arrangements with a taxi company; Provision of vouchers to patients to supplement transportation services, when necessary.

26

a) MHRI shall provide written notification to its patients, in English and Spanish at a minimum, of the availability of the transportation services described herein. b) The MHRI expanded transportation services shall remain in effect for a minimum of nine (9) months after this Decision goes into effect. c) At the 3-month, 6-month, and at the 9-month mark after the date that this Decision goes into effect, MHRI shall provide a summary to the Department detailing the utilization of the expanded transportation service for MHRI patients. MHRI shall include in said summary all relevant data and any patient satisfaction feedback that may be available. 5.

For all MHRI obstetric patients with commercial health insurance whose obstetrical care is transferred from MHRI to other CNE hospitals, no additional out-of-pocket costs are to be incurred by these patients. CNE shall absorb the additional out-of-pocket costs for these pregnant patients. (See Table #7 herein). a) MHRI shall provide written notification to its patients, in English and Spanish at a minimum, of the provisions of this condition. b) At the 3-month, 6-month, and at the 9-month mark after the date that this Decision goes into effect, MHRI shall provide a summary to the Department detailing the implementation of this condition for MHRI patients.

6.

W & I shall maintain its alternative birthing services and within six (6) months of the date of this Decision, CNE shall develop and submit a protocol to the Department, for review and approval, for replicating the MHRI inpatient obstetrics unit’s unique birthing experience within a CNE hospital that is characterized by the “culture of caring” consistently described in public comments. In developing such a protocol, within three (3) months of the date of this Decision, CNE shall convene an expert group to serve as consultants to the development of this model. This expert group shall include healthcare providers and stakeholders familiar with MHRI’s unique model for obstetric care that CNE will seek to implement, including, but not limited to: practicing OB-GYN physicians, midwives, nurses, doulas, and other key staff and public interest groups.

7.

Within two (2) weeks of the date of this Decision, MHRI shall make available and notify staff of outplacement and career transition services, including, but not limited to: the services of an outplacement firm engaged by CNE; access to a job fair at which all operating units of CNE are represented, as well as other employers; on-site representatives from the state Department of Labor and Training and representatives from CNE’s Employee Assistance Program.

8.

MHRI shall provide at least a thirty (30) day layoff notice to any staff displaced following this Decision.

9.

Within two (2) weeks of the date of this Decision, CNE shall provide to the Department a baseline of the hours of operation and number of clinical staff full-time equivalent (FTEs) by clinical staff category for each primary care outpatient clinic who were employed on the date of this Decision.

27

The conditions set forth above shall be enforceable and have the same force and effect as if imposed as a condition of licensure, in accordance with RIGL 23-17. Additionally, in accordance with RIGL 23-17.14-30, the Director of the Department may take appropriate action to enforce compliance with these conditions. If any of the aforesaid conditions or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect any other condition or application of any other condition which can be given effect without the invalid provision, condition, or application, and to this end the conditions, and each of them severally, are declared to be severable. Nothing in this Decision shall be interpreted to mean that the Department has determined that all elements contained in CNE’s model for restructuring will meet the community standard of care and comply with all applicable statutes and regulations. While all such elements have yet to be addressed by the Department, the Department hereby confirms it may take action to ensure such compliance. These conditions shall not eliminate or affect the viability of the conditions set forth in the 2013 Director’s Decision with Conditions signed by Michael Fine, MD. CNE shall continue to comply with those conditions, including: a. The transacting parties shall implement the conversion, as amended herein, and as approved by the Director of Health. b. The new hospital shall comply with section 23-17.14-12.1 (g) of the Rhode Island General Laws, as amended, that requires: “Following a conversion, the new hospital shall provide on or before March 1 of each calendar year a report in a form acceptable to the Director containing all updated financial information required to be disclosed pursuant to subdivision 23-17.14-12.1(b)(7).” c. Care New England shall maintain an Accreditation Council for Graduate Medical Education (ACGME) approved family medicine residency program that is substantially similar in nature, scope, and purpose to the family medicine residency program presently offered at Memorial Hospital, including all academic, medical, and research components. d. The new hospital shall continue to enroll patients in the CurrentCare Program and continue to comply with all CurrentCare data submission requirements. For example, in complying with part d of the 2013 Conditions set forth above, CNE shall expand its efforts to enroll patients in CurrentCare by offering enrollment to all prenatal patients and newborns and all patients seen in the ambulatory clinics. Additionally, CNE shall continue to comply with all CurrentCare data submissions requirements, including data that are currently being sent as well as any new requests by CurrentCare. CNE shall make the CurrentCare viewer available to all patients by the CNE hospital unless CurrentCare data are being made available through bidirectional exchange with CNE’s electronic health records. This Decision for Approval with Conditions shall be applicable to all successor(s) entities of MHRI and CNE. RHODE ISLAND DEPARTMENT OF HEALTH BY:

May 27, 2016 Nicole E. Alexander-Scott, MD, MPH Director of Health

Date 28

Appendix “A”

29

1

2

3

4

5

6

7