Supply and demand

The Health Services Council heard presentations and testimony regarding a proposed 50-bed inpatient rehabilitation hospital in Johnston during its meeting on Tuesday, ahead of a possible licensing vote next week.

Encompass Health Corp. – a company with 130 inpatient rehab facilities, or IRFs, across 32 states and Puerto Rico – is seeking to open its newest location in Johnston, making it the sixth IRF in the state. Kent County Memorial Hospital, Newport Hospital, Rhode Island Hospital and Our Lady of Fatima Hospital each have an IRF, while the Rehabilitation Center of Rhode Island is the only freestanding facility of its kind.

Deb Faulkner and Olivia Burke of Faulkner Consulting Group presented their report’s findings, which broke the project down to three categories – public need, affordability and clinical competence. The analysis found that Rhode Island’s five IRFs have 109 licensed beds, 89 of which are currently available.

Burke explained that use of the beds across the state is low, with an occupancy rate of just 63 percent for available beds and 51 percent of licensed beds. She said that Encompass entering the market would represent a 56 percent increase in available beds and a 46 percent jump in licensed beds.

FCG projects that with the addition of Encompass, statewide IRF occupancy would fall to 49 percent by 2030, or just 43 percent of what are defined as available beds. The presentation also illustrated a potentially stark future for other IRFs if Encompass hit its utilization goals.

Burke explained that, if Encompass achieves its targets, the combined occupancy rate for the other five facilities could drop to as low as 26 percent, or remain as high as 46 percent. She said it “could threaten the viability of some existing providers.”

Even if the market grew because of a new entrant, Burke said, the current Rhode Island capacity would be more than sufficient.

Burke said that the proposal looks to be fiscally responsible, but noted that Encompass would likely need a vast network of referral relationships with local hospitals – mostly all of which already provide on-site IRF care. Burke said fostering those connections “may prove challenging,” as South County Hospital is the only acute care location without an IRF on site.

She added that, as far as clinical competence, the analysis is “fairly narrative.” She said the findings in the report should cast “little doubt the proposed facility would meet the broad competencies outlined in Rhode Island’s hospital licensing standards.” The report also notes that a review of Medicare quality data for Encompass Health IRFs in Massachusetts “raise no concerns” about the company’s regarding its “ability to implement a clinically competent program” in the state.

Pat Rocha, representing Encompass, saved most of her rebuttal for next week’s hearing, but refuted the notion that there may not be a need for the facility. Rocha said the addition of Encompass could “grow the IRF market in the state substantially” and create more demand.

Robert J. Haffey, president and CEO of Kent, was one of many to speak out against the proposed IRF, saying it could have a dramatic effect on his hospital and others.

“If we all this to happen, there will be layoffs at existing hospitals and rehab facilities, [and] costs will go up,” Haffey said. “I do not think this is a good thing for Rhode Island.”

Teresa Paiva-Weed, president of the Hospital Association of Rhode Island, also testified to “strongly object” to the approval of Encompass’s license, warning the board that “this will, in fact, long term, harm health care in the state.”

“The only possible interpretation is this will increase the cost of health care in our state,” Paiva-Weed said. “The impact of viability, what to us is the single-most important provision in this report … A decline in patient volume across existing providers may threaten the viability of these providers.”

Rehabilitation Hospital of RI CEO Michael J. Souza, too, voiced opposition, saying his location has “plenty of occupancy if patients can come.”

Greg Mancini of Build Rhode Island was one of the few to speak favorably of the proposal. He said it would create more than 100 construction jobs and pointed out owner Peter Mantegazza’s 100 percent equity heading into the project.

Johnston Mayor Joseph Polisena, during a phone interview with the Sun Rise on Wednesday morning, said concerns about the need for Encompass are “nonsense.”

“People don’t want competition, so I disagree with that,” Polisena said. “This is something where I’d want to go [to Encompass for rehab] because this is what they specialize in. Instead of people going to Boston, people from around the world go to Boston, to have high-quality care in the state, never mind in the town, I think is very good. It’s about competition. These other facilities don’t want competition. It’s not like they are going to put 500 beds in.”

Polisena, a nurse by trade, said another IRF “keeps people honest” and could encourage residents of Connecticut and nearby Massachusetts communities like Attleboro to venture to Rhode Island for care.

“I know a lot of people that go to Boston,” Polisena said. “At least with a facility like this, they specialize in rehab, not that they do it on the side. This is what they do. It’s going to create jobs. It’s going to help people.”

The hearing was continued until Tuesday, March 3, when the council can take up a vote on Encompass’ future.