STATUS of Newport Hospital BIRTHING CENTER – Brown University Health on this, other programs

Received from Brown University Health – approx. 1pm, July 29th

***Sent on behalf of John Fernandez, President and CEO, Brown University Health***

Update on Programs and Services Under Review for FY26

July 29, 2025

Dear Brown University Health Team Members:

At Brown University Health, our commitment to delivering high-quality care and serving the community remains central to our mission. To sustain this, we aim for a modest 3% operating margin, which is essential for long-term stability and continued investment in patient care, our employees, teaching, infrastructure and research.

Over the past decade, we have not achieved our operating margin goals. Our revenues have not kept pace with rising costs for vital resources like pharmaceuticals, supplies, equipment and labor costs, which has led to a need to invest $1.2 billion to bring our facilities and technology up to the high standards our patients expect.

Despite rising costs, our revenue increases have been minimal (only 2.1% combined for commercial, Medicare and Medicaid). This disparity is starkly evident in our Medicaid losses, which reached nearly $138 million in the last two years alone.

To ensure we can continue to meet the community’s needs for critical patient services, we must act decisively. This means growing revenues, controlling costs, and achieving operational excellence.

As you know, in May we communicated to both internal and external audiences about seven areas for potential cuts or closures if our efforts to improve Medicaid reimbursement did not bear fruit.  While recent advocacy efforts secured $23M in increased support to Brown Health, that falls significantly short of the proposal we made to the state that would have yielded closer to $270M statewide to address long-standing underfunding.  For more information, please visit https://www.hari.org/.  If this underfunding is not addressed within the next one to two years, we will be forced to further reduce patient services, an outcome which is unacceptable to us at Brown Health and is a step we are determined to avoid.

The progress we made this year was thanks to your advocacy.  With your continued dedication and community support, I am hopeful we can resolve this decades-long challenge and ensure Brown Health’s ability to serve our communities for years to come.

In the continued spirit of transparency, I want to share an update on where the seven areas we identified now stand.

Brown Health Home Medical.   We will be closing Brown Health Home Medical, our durable medical equipment and supply services, effective Sept. 5. This move represents the culmination of a decision made this fiscal year to sell or close this service due to issues of financial sustainability. We are working to notify patients and providers and to help transition patients to alternate durable medical equipment service providers.

Inpatient Adult Psychiatry at Rhode Island Hospital.  Changes will be implemented.   Rhode Island Hospital lost nearly $25 million in FY24 on inpatient psychiatry—this is not sustainable. In light of the ongoing strike at Butler Hospital, changes will begin only after the Butler Hospital strike is resolved. We recognize the demand for behavioral health services and are committed to delivering high-quality care.  Examples of changes to come include reducing reliance on expensive contract labor (over 50% of staffing), reallocating staff where they’re most needed, and investing in staff training and safety.

Labor and Delivery at Newport Hospital. We understand the concern surrounding the future of the Noreen Stonor Drexel Birthing Center. While the center remains in the FY26 budget and is not currently scheduled to close, its long-term future will be evaluated over the next year.

We are committed to providing first-class services at Newport Hospital. We will form a task force that will conduct a review of our labor and delivery services at Newport Hospital—assessing quality, safety, access, finances, operations, community and statewide impact. This task force will include input from community leaders, donors, nurses, physicians, and others. It is important to note that recruiting OB/GYNs remains a major challenge, and sustaining a strong program depends on both clinical expertise and adequate patient volume.    

Samuels Sinclair Dental Center.  The dental center will remain open and able to care for patients.  Dr. Elizabeth Benz, director of the Samuels Sinclair Dental Center, and Tracey Wallace, SVP of Clinical Services, will be assessing and improving operations, with an additional goal of significantly increasing philanthropic funds to help offset the losses we incur by providing this service to the state.

Gateway Health Care. There will be no closures to Gateway services in the coming fiscal year, though we will pursue greater operational efficiencies. Over the past year, Gateway has made significant changes to stabilize operations and prevent financial losses.  In addition to these changes, the state has made the necessary investment to increase revenue for these services, which enabled this stabilization.  They will need to continue building on that progress to ensure long-term sustainability and access to care for our most vulnerable populations.

Service contracts for certain state programs (e.g., prisons, clinics).  These programs will continue for the coming year.  After careful review, we found that with improved efficiencies some of these programs were able to break even.  However, we will continue to closely monitor these state services.

Rhode Island Hospital Building Project. The building project at Rhode Island Hospital has been revised, but we are moving forward with the most essential components of this much-needed upgrade to our aging infrastructure. This multi-year, decade-long effort—which assumes significant philanthropic support—addresses decades of deferred investment. We can no longer delay critical improvements; these upgrades are vital to ensure the hospital can continue to meet the complex needs of patients and the community for years to come.

Like many health systems, we continue to navigate multiple challenges, including rising costs, uncertain state funding, and declining federal support — pressures expected to intensify in the coming years, especially with recent federal policy changes included in the Big Beautiful Bill creating additional financial strain.

We need our employees, patients, and the citizens of the communities we serve to stand with us and advocate on our behalf. The root cause of the challenges we face is the inadequate reimbursement for the care we provide. Without addressing this fundamental issue, our ability to sustain essential services is at serious risk.

As we finalize our FY26 budget, we will be communicating further changes necessary to achieve our operating margins, reinvest in our staff and facilities, and support our core mission of delivering high quality care to our patients and community.

Thank you for your hard work and your dedication to supporting our patients and families.

Kind regards,

John Fernandez, President and CEO, Brown University Health

This is a developing story