PROVIDENCE — The largest health care system in Rhode Island is looking to grow, but it plans to conduct a full assessment of its owned and leased properties as it “does not need the amount of administrative space” it currently has, its chief financial officer said.
“We’ve looked administratively at the amount of square footage we have and we don’t need it all. That’s pretty clear,” said Peter Markell, the executive vice president and CFO of Lifespan Corp., which owns five hospitals including Rhode Island Hospital. “We have been surveying all of the administrative leaders of how do they want to operate in this new hybrid-remote world.”
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“A lot of administrative space is leased, so there’s some timing associated with that when the leases expire and we’ll be adjusting accordingly in the future,” Markell said in an interview this week.
The company plans to retool its strategic plan in September, which could show areas of key investment and cuts, including in its real estate portfolio.
Markell’s comments come as Lifespan reported an operating loss of $3.7 million and net income of $15.2 million for the second quarter of the 2023 fiscal year, which ended on March 31. That’s an improvement over the hundreds of millions of dollars the company has lost over the last few years amid the global pandemic and staffing shortages that have rocked the health care industry.
Despite the company’s upcoming assessment of physical property, Markell said the system is looking to grow and reach a 3 percent profit margin by the next fiscal year, which will begin after September. “There will be all the normal stuff you go through during a budget process, but the most important thing is that we can see the path there,” he said.
Lifespan, which operates the state’s only Level 1 trauma center at Rhode Island Hospital, also owns Hasbro Children’s, The Miriam, Newport, and Bradley hospitals. Its executives plan to grow the system’s ambulatory units and building out a research collaboration with Brown University and Care New England, the state’s second-largest health care system.
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In February 2022, state and federal regulators put an end to a blockbuster deal that would have merged Lifespan and Care New England to form Rhode Island’s largest health system with 80 percent market power. It would have also been the state’s biggest employer.
While the systems are willing to work together in some areas, such as research, merger “discussions are dead for now,” said Markell. “The fact of the matter is, we compete... We’re pretty much focused on moving forward. And if opportunities present themselves, we’re always going to deal with them.”
In a presentation on Thursday, financial advisors at Lifespan told executives that the organization would need to align around the idea that “incremental changes will not be sufficient.”
“Organizations like ours will need to be bolder if we are going to continue to help our patients and community live better lives,” a presentation obtained by the Globe stated.
Yet the retention and recruitment of health care workers has persisted as one of the system’s greatest challenges as hiring managers compete with higher-paying hospitals in Connecticut and Massachusetts that receive higher payer rates. Markell said the highest turnover across Lifespan’s employees is among workers who had been with the health care system for less than three years, particularly those working overnight shifts.
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The system needs to hire 530 full-time nurses. Markell said the system could reduce its current reliance on contract labor and save $5.9 million annually for every 50 travel nurses hired through temporary staffing agencies, if they could be replaced by permanent staff.
Among higher wages in neighboring states, Markell said Rhode Island’s housing crisis, the cost of student loans, and improving the company culture are other standout issues.
“Everybody has different needs in terms of compensation and benefits. You can’t ignore that. But their work environment, who they’re working with, their manager, are all drivers” that the system is putting efforts into to find “more effective leaders,” he said. “I don’t expect anybody to hop out of bed every morning and do an Irish jig to say they’re going to work at Lifespan. But they should feel good about it.”
Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her on Twitter @alexagagosz and on Instagram @AlexaGagosz.