Bristol Health Uses Annuities To Keep Pension Losses To $31.4M

Bristol Health, parent company of Bristol Hospital, posted a sobering $31.4 million loss for 2019, but administrators said that was mostly a one-time cost to end its traditional pension plan.

“Ordinarily, a loss of that magnitude would evoke serious concern,” Treasurer Louis Auletta Jr. told the annual meeting of Bristol Health’s board and corporators last week.

But buying annuities for the older employees still on its defined-benefit plan is a way to reduce risk and get finances on track for future success, Auletta said.

Bristol Health, which runs the community hospital as well as as a physicians group and the Ingraham Manor nursing home, typically posts annual profits or losses of no more than a few million dollars either way.

But Auletta and President Kurt Barwis said 2019 was the right time to refinance debt and get rid of the defined-benefit plan.

No employees since 2006 have been able to join the plan, and instead are covered by 401K or 403B programs. But even so, administering the traditional plan for long-time employees was costing more than $1 million a year, and left the hospital exposed to substantial liability, Auletta said.

By purchasing annuities with Mass Mutual to cover retirement payments to those employees, Bristol Health was able to do away with the risk of major losses in a market downtown, he said. In addition, the annuities release the hospital from the risk of rising longevity because each extra year that retirees live adds substantial cost to a traditional plan, he said.

Bristol Health recorded just under $205 million in operating revenue, with $156 million of that coming from the hospital.

Separate from the pension switch, Bristol Health lost nearly $11 million in day-to-day operations. Barwis and Auletta said unpaid patient bills were up by about $4.8 million, partly because of Medicare rejections and billing complications.

In addition, the organization filled more than 60 vacant jobs, mostly on its medical staff. It also raised pay for nurses and others, Auletta said.

“Bristol Health, like all hospitals and health care systems, is experiencing intense competitive staffing pressures,” he said.

In response, the hospital spent $1.7 million on pay increases, and another $700,000 in higher matching contributions to employees’ 403B retirement plans, he said.

Barwis said his management team foresees $8.5 million to $15 million in built-in cost savings for the new year, ranging from reductions in the state hospital tax to the end of one-time expenses for upgrading equipment.

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