- We nip and tuck here and they find a little revenue here.

Find a little revenue there, make a cut here.

Hope that things are a little better than we expected.

And then the state staggers on for another year.

- 13,000 people will drop insurance by the end of the year because the subsidies are in many cases, more than doubling.

Because they're younger because they're healthier, that means they're going to be flooding our emergency rooms and urgent cares.

- It's 50,000 roughly ER visits a year are covered by Roger Williams and Fatima, you push those out probably primarily to Miriam and Rhode Island Hospital, which are already overstretched.

What does that look like?

(dramatic music) - And welcome to this episode of "Lively."

I'm Jim Hummel.

I am joined this week by WPRI Politics and Business Editor.

Did I get that right?

- You did, well done.

- Ted Nesy.

and Nancy Lavin, senior reporter for the Rhode Island Current.

Two Rhode Island hospitals that serve some of the state's most vulnerable people got a brief reprieve from closing, but their future remains unclear as the governor is actively looking for a new buyer.

I'm so glad to have both of you guys on this week 'cause you've been neck deep.

I don't know whether that's the long straw or the short straw of reporting.

Ted, let me begin with you.

There have been some developments since last week.

Set the table on who the players are here.

- Yeah, so you have Roger Williams Medical Center and Fatima Hospital, which are jointly under the umbrella of Charter Care.

They're owned by a California for-profit prospect that's currently bankrupt.

And so the question's been who, if anyone, is going to take over these hospitals?

The state's been working with this Georgia nonprofit now for a couple of years, the Centurion Foundation, to have them become the owner of the hospitals.

But they just haven't been able to get the money.

The bond market has just not been convinced, maybe understandably, that these financially struggling hospitals are a good investment.

And so now the bankruptcy judge deal with their current parent companies kind of saying, Rhode Island, come on, I've let you keep these hospitals open, but you need to resolve this.

And all of a sudden out of the wings comes Prime, the owner of Landmark, which the governor and his team are characterizing as a plan B. So now we kind of have dual track who's gonna buy them and the looming threat of the bankruptcy judge making a move down in Texas.

That's where all that's happening.

So there is, I think Nancy would agree there's a lot of moving parts, a lot of proper nouns.

But fundamentally it's just can the state find somebody who will run these hospitals for the long term?

- Yeah, I'd say that's a pretty good synopsis.

It's been a lot of twists and turns over the years in terms of who could buy these hospitals.

We found a buyer, we can't get an application approved by state regulators.

They had to submit three different applications.

Finally got approval with 85 conditions attached in June 2024.

Needed to close the financing to sell it.

Then Prospect files for bankruptcy.

Oh no, what's gonna happen?

Oh, the bankruptcy judge says, okay, you can still go ahead with the sale.

10 months later they still can't finance the sale.

All of a sudden now we have this other potential buyer and Prospect, the original owner says, look, we can't keep paying money to fund these hospitals that we are supposed to have off our balance sheets.

We owe, you know, a zillion creditors up to a billion dollars and we wanna close them they said by December 31st.

So the latest compromise is that they have enough money right now to stay open through the end of November, which is halfway through.

And the goal is that we're gonna hopefully maybe have a buyer like a deal finalized by the time that all of the parties appear back in bankruptcy court in Dallas on November 18th.

- I will say, I think my own thinking on this has shifted in the last week, Jim, where when Prospect, again, the bankrupt current owner put in the closure notice.

I had a flashback to when Memorial Hospital closed.

Everyone remembers that.

Everyone was sort of saying, we don't want Memorial Hospital closed.

And yet it did 'cause kind of, nobody took the leadership role to say we've got to find a plan to avoid that.

I think because of that, I think there's much more, I think there's more understanding at the State House.

Attorney General Neronha is a very important player in all this that they could close if we don't work together to try to engineer something.

I think that's part of why the governor, and don't forget his health secretary, Richard Charest worked for Prime when he was CEO of Landmark Fear.

So he has a deep comfort level with them as an alternative.

But I think because of Memorial and the domino effects, I mean, look, they're spending tens of millions of dollars on the ER at the Miriam, partly because of the ripple effects of losing that ER at Memorial.

- So we'll get into the imagination 'cause you had a story actually for today.

We're taping on a Thursday about the union's upset.

We'll get to that in a minute.

Let's zoom out a little bit about why this is so important.

You have lifespan in Miriam.

If you have to go to the emergency room already or get healthcare, it's kind of tough because there's pressure on them.

Now they're saying if Roger Williams closes, they've got 500 beds, they have a behavioral health unit.

That's the concern, right?

If you lose Memorial and you lose them to bankruptcy and you can't get somebody to come in, you're really gonna be in trouble if you need to go to a hospital.

- John Fernandez said it.

We were together, Nancy and I at a news conference at Attorney General Neronha's office.

And John Fernandez, the head of Brown Health was there, it was unrelated, but we did all ask about this 'cause it's been brewing.

And he said it's 50,000 roughly ER visits a year are covered by Roger Williams and Fatima, you push those out probably primarily to Miriam and Rhode Island Hospital, which are already overstretched.

What does that look like?

I think the problem is, you know, even if the current model for Roger Williams and Fatima isn't working very well financially, some of what they do is badly needed, even if it's not profitable.

And that's where the state's struggling.

- They also have about 20% of the state's behavioral health beds, which we know we do not have enough inpatient, you know, psychiatric mental health care.

So to lose those, Roger Williams has the only state accredited bone marrow transplant facility in the state.

There's 2,400 people who work at both of these facilities.

And in a court hearing last week, or maybe it was the week before, it's all a blur.

The ombudsman for the judge, you know, had visited the facilities and basically warned you're going to lose all of these, you know, specialized healthcare providers that we so desperately need in Rhode Island.

They're all gonna walk if these hospitals, you know, don't find some resolution.

- Because the financial model just doesn't work well in Rhode Island.

Whether you're Brown Health or Fatima.

- And the reimbursements is, and all the stuff we've talked about during the legislative session.

We've talked about Prime kind of back here.

And that Richard Charest, who has been working with the governor to try to keep these open.

He had a relationship with them.

And so you can look at it, the governor says, hey look, we've gotta be working on parallel tracks here because if it doesn't come through with Centurion, we need to have a backup.

But the union's not pleased 'cause they think he's putting the thumb on the scale.

And saying, you have a buyer, why are you injecting yourself with somebody else?

So I see both sides of that.

You were out, there was a union protest the other day about that.

- Yeah.

So the union's argument is kind of twofold about Prime.

One is that they just don't think they're a very good hospital operator.

You know, this is a for-profit company, but they're saying it would be their separate nonprofit foundation that would buy the hospitals.

They have a not great history in terms of a trio of DOJ settlements totaling over a hundred million dollars for Medicare fraud, billing fraud, illegal kickbacks in a three year period, which a Reuters analysis I found, this isn't my brain said that was, you know, the most of any sort of large healthcare facility in recent years.

And that's in addition to, you know, kind of a reputation for, they buy struggling hospitals and they find cost cutting measures.

That means cutting services, cutting employees.

They're doing both of those things in Illinois right now, having just bought eight hospitals there.

- So be aware of what you asked for.

- And I think, you know, Richard Charest obviously has sung their praises about taking over Landmark, but the union who represents workers at Roger Williams and Fatima also has workers at Landmark, and they say it's not been good.

They're not a good corporate partner.

It's been hard to get them to give competitive pay and benefits.

So that's kind of one side.

And then the other side is, did the state open itself up to a lawsuit by going and courting a second buyer when there's already a deal on the table?

And there the union attorney says, yes, he claims this is a torturous claim of interference in business relationships.

But a business attorney I spoke with, Bob Wheland former, or Bob Flander's, former Supreme Court judge.

You know, his point, which I thought was a good one, is that even though Centurion has had this deal approved, it was conditioned upon them raising the money.

They haven't raised the money yet.

So that deal is not signed, sealed, delivered, we're breaking contracts off.

- So it's almost like a purchase and sales agreement when you buy a house, conditional on getting the inspection, the building inspection.

If you can't get that to satisfy the mortgage, then what deal do you have?

- Look, I mean, you know, the state does not have a lot of leverage here.

I mean, you know, they crafted a deal, you know, conditions that Nerhona as well as the administration put on the Centurion deal that so far that first of all, they'd had to change those conditions repeatedly because it was clear the bond market wasn't gonna give the money to Centurion to buy the hospitals, take 'em over under those conditions.

Also, I'm constantly thinking about the parallel with last year across the border in Massachusetts when Steward, very similar situation, a bankrupt for profit whose name was mud in the local market.

Governor Healy poured a lot of state money into saving most of the Steward hospitals, including in Taunton and Fall River where she had Brown Health take them over.

And Brown Health's getting money from Massachusetts.

The state really in Rhode Island has not been willing to put any significant just infusion of cash.

They did a small thing on behavioral health, which it's not clear to me there's much margin of profitability giving that extra business to these guys.

So part of their problem is they want someone else to put the money in.

And when you have two financially struggling hospitals, it's not clear at least to continue operating as they are.

Anyone wants to do that.

- I think it also kind of begs the question, you know, part of the reason that Centurion is like being billed as, or has been billed as like the only hope is they were the only interested buyer at the time that Prospect was looking to get out of these hospitals.

So why has the state, you know, if Richard Charest has this relationship with Prime Healthcare, like why not move this along?

Not when we're like a month away from closure.

Because if Prime does come forward with a deal, it's going to need to go through the same stringent dual regulatory review by the AG's office and the Department of Health.

- And that takes time.

- That Centurion went through and that took over a year, - I think too.

it's unlikely, but, you know, nothing says it could only be Prime, could Brown Health or Care New England, you know, Nerhona has $50 million in his back pocket.

He squeezed out of the old investors in these hospitals through a whole different drama that went on a couple years ago.

- And he's using some of that now to keep it afloat, right?

- Yes and so, you know, could one of those other, you know, these are failing hospitals, so the antitrust stuff isn't as big a deal.

There's a lot going on here, but currently I you'd probably wanna bet on Prime based on the way things are going.

- I know we could do a whole show on it, but let's just zoom out again to the larger issue about Care New England and Brown Health used to be lifespan and some of the concern they've taken on these Massachusetts hospitals, they were pinched to begin with and now the COVID money's run out.

And so what do you see about the financial health of the two big ones?

They tried to merge, they said no, that would be antitrust situation.

What do you think going forward?

- Well, and I missed the last Brown Health Bond call.

You listened to it.

And I believe they said they're losing more money than they expected on the day Brown Health on this two hospitals they got from Steward.

- What a shock.

- Well, exactly.

And they told us that.

I remember asking John Fernandez, you know, these were not doing well, are you sure?

And he said, well, you know, they got the state money and now, but now they're saying, oh, turns out they were in worse shape than we thought.

So I could also see where that maybe gives even more pause back here in Rhode Island to the leadership at Brown Health.

- Yeah, so at Brown Health's last earnings call was really interesting because, you know, they're the ones who threatened to close the Newport Birthing Center, created this community backlash that we're gonna keep it open, you know, for the year and reevaluate.

But their earnings suggests that they're actually doing okay at their Rhode Island hospitals.

And what is dragging down their balance sheet is these two Massachusetts hospitals they took over from Steward because rebuilding the reputation, rebuilding the volume of patients and then also having the staff post Steward has not gone as smoothly as they thought.

And then the other thing I think for hospitals nationwide, but you know, particularly in Rhode Island, because we already don't have good reimbursement rates, is that these federal budget cuts have big impacts for the money that hospitals get through the state, through the federal government directly.

And there's going to be major losses there.

- We'll keep an eye, particularly as we head toward the end of November on Roger Williams and our Lady of Fatima.

The state of Rhode Island got some short-term good news this week about its finances, but the long-term outlook is bleak in the wake of federal money likely drying up next year.

Nancy, you had a great story about how the, what they call the One Big Beautiful Bill, others have other names for it about that's really the shoe that's gonna drop come the new year.

There's a huge ripple effect and it's gonna affect state finances.

- Yes.

So the state lawmakers, you know, even before the budget, federal budget cuts were signed in July, knew that this was coming down the pipe, required as part of the state budget that took effect July 1st.

That this whole group of state agency administrators and outside experts have all these working groups over the summer, lucky them to analyze all of the different aspects of how federal budget cuts would affect Rhode Island.

And so we got three reports spanning close to 300 pages on October 30th, the day before they were mandated to be due.

And they really look at sort of overall revenue impacts and then a specific focus on like health and human services and a separate focus on tax changes.

And surprise, it's not good, it's not good for people, but it's also not good financially for the state.

You know, losing people on Medicaid or losing coverage for Medicaid through changes to eligibility and work requirements is going to shrink the federal funding that the states.

- It's a pass through.

So it comes through the state and that dries up.

- Similarly as we've all heard in the news so much about SNAP, you know, now SNAP has been, hopefully money is flowing again.

We have full funding for SNAP for the year, but eligibility requirements are changing pretty drastically.

And there's also some strict mandates around states reducing their error rates that essentially the best way to do that is to make it much harder to be on food assistance, even if you qualify.

- And right now the state's error rate is so high for SNAP that the state's facing $51 million effectively penalty a year.

And it's funny because, you know, all of us who covered the UHIP crisis, the whole point was to get a cleaner computer system for this stuff.

So it was notable to me that the state has one of the really bad error rates still.

- Didn't SNAP though, the whole SNAP situation show how much we rely on the federal government because they said it's $29 million.

And the governor was quoted saying, we can't backfill.

I mean this is the federal government's responsibility.

They're trying to put it on the states.

And we just can't handle it.

Beyond short term crisis.

- Well the good thing if there is a good thing about most of these sort of more permanent federal, like really overhauls to the way that federal programs have worked for decades is that most of these changes don't actually start like January 1, there's 2027, 2028, 2029 even, there's something for the SNAP error rate called the Alaska exception because Alaska-- - Lisa Murkowski.

- Yes, exactly.

- Because Alaska has such a bad error rate that basically if your error rate is bad enough, you get a little more time to comply.

So, you know, there's like a little bit of a strange incentive to like be worse.

- You get an extra couple weeks for the term paper.

- Exactly.

- So what about this for the state's finances, because the speaker, there was a lot of calls during the last session.

We need to raise the tax on the higher income people almost keeping that card because maybe he sees these storm clouds coming down the road.

- Yeah, I mean there's a part of me that sometimes I think we overcomplicate the budget discussion.

It's in some ways very simple.

The state has committed itself to a bunch of programs that grow at almost 4% a year with a revenue base that grows at 2.5.

You don't really need all the details after that to know every single year you're gonna be in the red, and then that leads to the whole January, oh we have a deficit and then we nip and tuck here and they find a little revenue here, find a little revenue there, make a cut here, hope that things are a little better than we expected.

And then the state staggers on for another year.

And that's true of a lot of blue states that have committed themselves to a lot of healthcare and education spending that just grows faster than the rate of inflation and therefore revenue can't keep up.

That's just a permanent problem.

Now you add these federal changes, that's a new issue, but in some ways, there's always some issue cropping up that's getting more expensive or some commitment.

- But we're on such a thin margin.

And they weren't expecting this.

I mean, maybe the people behind the scenes were, but this is not something a year ago you were gonna foresee.

- No, not at all.

- And the federal COVID money's dried up.

So now we're really in a pinch.

- Right, and I think even though we have a better idea through these three reports about like the financial, there's still a lot of things that we're looking for federal guidance on.

You know, there is still the possibility, the thing that dragged the government shutdown on for 43 days of the failure to extend these discounts for marketplace insurance through the end of the year, that's gonna have a big cost in Rhode Island, both for people being uninsured, but also losing federal money.

I mean, maybe between now and December 31st, Congress will do something to extend that was, you know, one of the provisions of ending the shutdown is that they're at least going to have a vote on this supposedly.

- In the Senate.

- Well the Republicans have been trying to get rid of what we've, you know, colloquially referred to as Obamacare, the Affordable Care Act.

But there hasn't been a replacement.

They don't like it because they think it's kind of socialized medicine, but they haven't been able to come up with a replacement.

And it affects people in red states.

You go to Louisiana and Mississippi and they're like, you're gonna take away my health insurance, what do do you do?

- And same to SNAP, SNAP is very important in red states too.

And I think that's why, you know, I think that's why you've seen the president's job approval rating falling because he's now not on great ground for Republicans don't wanna be talking about healthcare and SNAP, it's issues where they don't wanna spend as much money as maybe the public wants.

Whereas they're much more comfortable on something like immigration where the public is more hawkish and Trump does have more wiggle room or the economy.

Yes, not a great topic at the moment, maybe for the president, partly due to tariffs, but still something where Republicans feel better about their messaging.

I mean, you know, you had Marjorie Taylor Greene out there campaigning to keep the Obamacare subsidies saying, look, I don't like Democrats, but we people can't afford their health insurance we gotta do something.

I will say two things to keep in mind as we talk about this federal budget stuff.

As Nancy said, a lot of it's staggered and things can change.

So, you know, if the Democrats were to win the house and bipartisan deals were needed more on spending stuff, you could see some of this stuff getting reversed, getting pushed out, being made easier.

So it's not all set in stone forever.

And then also Mike Dibiase made a point to me over the summer when I interviewed him, that the Medicaid cuts the federal government is doing are definitely harmful for the hospitals in Rhode Island because they'll have less revenue.

But you know, state spending on Medicaid, the biggest program in the budget is linked to federal spending.

Federal spending goes down, so does state spending.

So this stuff is complicated.

And so I just wanna make sure we're not chicken little as reporters about it.

We have to see how it all plays out.

And as Nancy said, some of the federal guidance is not even in, so we can't even tell it's gonna be implemented.

And so we'll see what happens come January when we get back in session.

With the federal government reopened, the immediate focuses on getting air travel back to normal for the holidays with the long-term focus on healthcare subsidies for millions of Americans.

Let me just say, as someone who flew last weekend, we had a wedding in Miami.

It was crazy, we had a bunch of family members coming in, everybody but my daughter made it back.

She was flying from Miami to LaGuardia, canceled, had to go to Dallas, her bag went to JFK.

I mean, but that was one little bit of what's going on.

So we're taping on a Thursday morning, the government is reopened.

Everybody has a sigh of relief, but there's a lot still coming down the pike.

- Yeah, I mean I think we're still waiting to see if there's anything that Congress will do to sort of reverse the December 31st expiration of these big federal discounts for marketplace healthcare.

You know, flights are not gonna pick back up right away.

I also heard on the radio on my way over here this morning that you know, furloughed federal workers are back to work and they will be getting back.

Those who are not contractors will be getting back pay.

However, interesting.

They're getting one lump sum for all of their back pay, which could put them in a higher tax bracket and decrease their earnings.

Which is pretty messed up when you think about how long, you know, for people who have been going, you know, especially think about, there are some families where there's two people who are federal workers and they haven't been collecting income for 43 days.

- It is, I mean, you know, it's almost too obvious to say, but you know, the longest government shutdown in history, I mean just another sign of how really dysfunctional Washington has gotten and you know, people say, oh, don't do a both sides thing, but it just, this is our system now.

You know, and if someone says, well, you know, you know the Republicans are, you know how they are about issues that the Democrats are dug in, whatever it is, the system really isn't working well to force compromise and to keep things on track.

And I did think it was interesting how it took, I feel like a couple weeks for the shutdown to really break through, the first few weeks because missed paychecks hadn't happened yet.

SNAP at first was still being paid, the air traffic effects.

It takes a month now, you know, and I have to think the next time we can have a crisis soon as January, right?

Because this is a short term funding period.

But you also have a president who was not interested in coming to the table.

He was traveling a lot.

He was kind of pouring fuel on the fire.

Not a surprise for President Trump, but other presidents have tried to get people together.

And so it's not surprise in my mind, the two longest shutdowns have been in Trump one and Trump two, we talked, we were talking earlier about healthcare in Rhode Island.

I wonder as we go into the new year and people are starting to get their renewals already, part of Obamacare was the mandate.

You have to have it because the young people subsidize the old guys like me, right?

Whether we're gonna see people just dropping insurance altogether.

They're gonna say, I can't afford 3000 rather than 1500.

So then what pressure does that put on the system?

- It's bad, I spoke with Lindsay Lang, who's the head of HealthSource Rhode Island last week.

They, HealthSource Rhode Island, estimates that 13,000 people, which is more than a quarter of the 41,000 who are on marketplace insurance right now, will drop insurance by the end of the year because the subsidies are in many cases more than doubling.

Most of those people are going to be the people who are feel more, I guess, risk willing to chance it because they're younger.

Because they're healthier, that means they're going to be flooding our emergency rooms and urgent cares.

It also means that the pool of people left to cover in general for all insurers is skewed towards older and more medically expensive, which further increases their costs.

It increases insurers' costs.

And not everyone likes to think about, well we don't care about insurers, but what insurers expenses are also correlates to what insurers can pay providers.

- I mean, Blue Cross Rhode Island last year paid 91% of its premium revenue went to medical costs.

You know, it's not like they're paying a little bit on medical and it's mostly private jets or something.

It's just, we talked earlier about the hospitals of Roger Williams and Fatima, Jim, I mean it's really one big story of a very expensive Rhode Island/American healthcare system.

And you know, it's like you're squeezing a ball and it's coming out the sides.

You know, the people's insurance is going up so much, some people are gonna drop it, which creates its own effects, yet the hospitals still aren't, you know, think about it.

You have people saying, oh my god, this insurance is so expensive, I can't afford it.

And the hospital's saying, oh god, we're not getting nearly enough revenue to stay viable.

I mean, I have no idea what the answer is.

Look what happened, you know, the ACA passed 15 years ago and we're still talking about this as the Republicans like to point out.

But then what is the solution?

'Cause the current system does not work very well.

- Okay, let's go to outrages and or kudos.

Nancy, let's begin with you this week.

- So this is a kudos to Antonia Farzan at the Province Journal.

She always has great stuff, but she did a story this week about her personal experience living on the estimated $6 a day.

That is what the average SNAP recipient would receive.

I thought, you know, it was a compelling story.

Not only, you know, you think about just not being able to afford to eat whatever you want, dealing with maybe, you know, getting some subsidized produce that goes bad faster.

Not having as much variety, but also kind of the emotional and the psychological part of feeling kind of isolated and ostracized.

You know, I think so much of our community, the way that we convene with people is around food and spending on food.

And so you just, you also, I think, think about that.

And that's people who are on federal food assistance don't get that.

- I told her, I texted her 'cause I was reading it on the plane back and I said that was one of the most impactful stories I've seen.

She done one a year ago about trying to ride the bus for a week.

And how difficult that was.

That's journalism that, you know, you get in there and she talked about the mental toll that you talked about, which I thought was really impactful that everybody thinks, oh, they're on the dole.

SNAP is to try to make it, you know, extend.

You're not just sitting back eating chocolate bon bons.

What do you have?

- My outage fits right in with what you two are saying because my outrage is I need, we people need to wake up to the crisis in newspapers specifically.

I think, I can't stress enough, I'm a TV guy so I'm not talking my book.

Like we can't lose our foundational layer of news that comes from the print outlets.

- But you and I both come from a print background.

- I do, I just understand I'm 41.

I understand I've been doing this for 20 years.

I understand how the journalism ecosystem works and I keep talking to people in my generation.

So people with young kids who now are homeowners, you know, getting to the age where everyone says, well now you'll subscribe to the paper 'cause you want to know what's going on in the community.

They say, oh, I don't get the paper.

I don't get this, I don't get that.

No, subscribe to the East Bay papers if you're in one of those towns.

Make sure you get the Valley Breeze every week.

Get the Sun Chronicle if you're up in Attleborough.

Because I don't think the average American necessarily understands that the large statewide outlets like Channel 12 are not gonna be able to go to every local meeting.

We have to support, and it's much, much, you know, a great outlet like Nancy's is filling some of the gap.

But it's much better for us to sustain the institutions we have than to let them wither, realize we don't have them and then try to build them up again.

So I hope people wake up to that before it's too late.

- Well said, Ted, Nancy, great.

It's a quick half hour and thank you for joining us.

Be sure and check us out on Facebook, X, Instagram, and on the Ocean State Media YouTube channel.

We'll see you next time right here on "Lively."

(dramatic music)