The Lifespan hospital chain announced last week that it sustained more than $50 million in losses as it closed the books on 2019. Lifespan President and CEO Timothy Babineau said the losses were due to "dramatic and unexpected" reductions in Medicare reimbursement rates, treating more poor patients after Memorial Hospital in Pawtucket closed and a shift in specialized care to Boston’s medical mecca.

The backdrop to all this grim holiday season news is the failed merger talks between Lifespan and Care New England, the state’s second largest hospital group. Despite the intervention of Gov. Gina Raimondo, Brown University brass and elements of the local business and non-profit community, the two systems, the Hatfields and McCoys of Rhode Island, couldn’t agree on merger terms.

Care New England reported better financial numbers, but the long-term prospects for that system aren’t great either unless it can link up with a larger hospital group that can bring sorely needed capital improvements to its aging facilities. Care New England, anchored by Warwick’s Kent Hospital, sought a combination with Boston’s huge Partners hospital system.

In the short term, Lifespan has to find a way to tighten up. It has hired a consulting firm to review operations and plans to offer an early retirement program to employees at the end of next March. President Babineau also mentioned that layoffs are possible as a last resort to curb the losses.

The mention of layoffs ignited predictable cries of foul from the unions representing thousands of Lifespan’s workers. The head of the nurses union called any layoff plan callous and out-of-touch, given that hospital workers are already stretched thin.

This is part of the other unspoken aspect of 21st Century medical care all over the country. Hospitals, in particular, are part of a medical system drowning in big costs that aren’t sustainable in the long-term. Almost 20 percent of the United States economy is yoked to medical care. With more than 15,000 workers, Lifespan is often referred to as Rhode Island’s largest private employer.

That stretches the description of private employers. Is it really accurate to describe an industry that gets more than 60 percent of its money from the government as a private entity? Yet all these workers are folks with families to support. Hospitals are high-cost venues that are some point going to have to go on a diet. Former Rhode Island health commissioner Dr. Michael Fine says that hospitals are great at providing jobs but not so good at ensuring that patients get sorely-needed services such as primary care and substance misuse treatment.

There are other problems with Lifespan’s self-diagnosis of its faltering finances. Blaming low reimbursements from government programs such as Medicare and Medicaid has become a convenient nostrum for hospital executives. About 600 hospitals across the nation have sued the federal government over cutbacks in payments from those programs. Yet, as consultant David Williams recently told the Boston Globe, these reductions were not unexpected. Lifespan executives should have known that.

Medical care is too important to the economy and citizenry to be left to hospital executives and union leaders.  Taxpayers pay the bills. Their representatives should have more say in policies. One example the state may be able to do something about is the scandal of high drug prices. Take the cost of two drugs cited recently by Consumer Reports –Symbicort, used to treat asthma, and Forteo, which treats Osteoporosis. A 90-day supply of Symbicort costs about $130 in Canada and $1,000 in The U.S.  Forteo is roughly $2,300 in Canada and $9,800 in the US.

Several states, including Vermont, are asking the federal government for permission to import Canadian medicines. The Rhode Island General Assembly needs to tackle this issue and the future of the state’s hospitals in the session that convenes shortly after New Years’.

And if hospital belts must be tightened, let’s ensure that the pain is spread equally. It’s time for Babineau, who earns more than $2.5 million a year, to take a salary reduction before any nurses are laid off. The salaries of executives make a mockery of hospitals’ status as non-profits which pay no taxes.

Scott MacKay’s commentary can be heard every Monday morning at 6:45 and 8:45 and at 5:44 in the afternoon.