Eleanor Slater Hospital would receive $167.8 million over the next seven years for a new medical facility, building upgrades and a new electronic medical records system in Governor Daniel J. McKee’s proposed state budget released Thursday.

Eleanor Slater, which has campuses in Burrillville and Cranston, serves as Rhode Island’s hospital of last resort for patients with complex medical and psychiatric needs. The hospital is paid for primarily through Medicaid, the federal-state insurance program for low-income and disable residents.

About 65% of the governor’s proposed investment– $108.2 million – would fund a new 100-bed medical facility on the hospital’s Zambrano campus in Burrillville, the governor’s office said in a statement. The new facility will replace the Frank Beazley Building, named after a former patient and advocate.

“The significance of these investments cannot be overstated,” Richard Charest, the hospital's chief executive officer and director of the state Department of Behavioral Healthcare, Developmental Disabilities and Hospitals, said in a statement. “These projects will better position the hospital to carry out its mission to care for Rhode Islanders who require our services for long-term medical and psychiatric conditions, and they will help our staff as they perform this work. We are grateful for the Governor’s support.”

McKee’s spending plan also includes $14.3 million for repairs and upgrades to buildings, equipment, and utilities at the Burrillville campus, the governor’s office said. Another $3.2 million would fund the installation of a ventilator unit at the Beazley Building to better treat patients with specialized needs.

McKee has proposed spending about $19.7 million – about 11% of the nearly $168 million – on Eleanor Slater’s Cranston campus. The governor’s office said the funds would come from the money already borrowed for life and safety improvements at the Regan building.

McKee’s budget includes another $22.4 million to develop an electronic medical records system for the hospital. The new system will replace the existing paper records system, and is designed to increase efficiency and improve tracking of patient data.

Eleanor Slater has been under federal and state scrutiny since June of 2021, when it received a preliminary denial of accreditation due to conditions that a national accrediting body said posed risk of an “immediate threat to health or safety.”

The Joint Commission reinstated Eleanor Slater’s full accreditation in late December.

Eleanor Slater’s former chief medical officer is among a handful of employees who raised alarms about pressure from administrators to label psychiatric patients as medical patients to remain eligible for Medicaid. The hospital is currently under investigation by the state Attorney General’s office for alleged Medicaid fraud related to its patient billing. 

Federal laws prohibit long-term care facilities such as Slater to bill for Medicaid reimbursements if more than half of their patients have a primary psychiatric diagnosis, qualifying them as institutions of mental disease, or IMDs. 

Rhode Island has lost tens of millions in Medicaid funds for periods when Slater reported that more than half of its patients were hospitalized due to psychiatric illnesses, which disqualified it for the federal reimbursements. 

As of December, the state had collected about $47.6 million in federal Medicaid reimbursements for Slater, said Randal Edgar, a BHDDH spokesman. 

The McKee administration announced plans in November to relicense part of Slater as a psychiatric facility for patients ordered by the court into treatment. The plan to spin off the Roosevelt Benton Center in Cranston as a psychiatric hospital is designed to reduce the psychiatric patient count at Slater so it can remain eligible for state Medicaid funding. 

Health reporter Lynn Arditi can  be reached at larditi@thepublicsradio.org. Follow her on Twitter @LynnArditi.