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NIFA orders NuHealth to file formal plans to address budget deficits

Nassau University Medical Center in East Meadow is

Nassau University Medical Center in East Meadow is shown on Feb. 27, 2019. Credit: Barry Sloan

A state control board on Monday ordered leaders of Nassau County's only public hospital to file formal plans addressing persistent budget deficits and auditors' warnings that the health system might not survive much longer.

NuHealth, the public benefit corporation that operates Nassau University Medical Center and the A. Holly Patterson nursing home, has 90 days to file a plan with the Nassau Interim Finance Authority, the state board that controls county and hospital finances.

NIFA directors voted 4-0 Monday evening to formalize the requirement, an agency spokesman said.

In the resolution, NIFA officials cited the "lack of a viable financial plan by the [NuHealth] Board and its apparent misunderstanding of its very serious financial problems."

NIFA is requiring NuHealth to file a plan after two consultants this year warned NuHealth could possibly fail.

The resolution criticizes the politically appointed board, writing that "in public discussions" at board meetings, "most of the Board appears to have substantially ignored the report and the urgency of the fiscal tsunami that has been identified therein."

In February, the Manhattan consulting firm Alvarez & Marsal said NuHealth needed major overhauls to survive and should consider closing its emergency room, reducing staff from 3,400 to about 300, and selling off the nursing home.

A June report from the Manhattan-based Mitchell Titus accounting firm said NuHealth's deficit had spiked 60% in 2020, rising to $102.3 million from $63.9 million in 2019.

For the third year in a row, auditors issued a note of "going concern," an accounting term used to warn when an entity might not survive. The first warning came in June 2019 when the Grant Thornton accounting firm reported on the system's financial performance in 2018.

The audit of the 2020 fiscal year said NuHealth had not "developed a formal plan to address the ongoing going concern at the corporation."

NIFA Chairman Adam Barsky said it was alarming the hospital hadn't devised a plan.

"The auditors have noted they have yet to see a plan for how they address that," Barsky said during an interview with Newsday on Monday. "It’s been some time since this issue’s been raised. The auditors have noted they have yet to see a plan for how they address that."

Dr. Anthony Boutin, chief executive and president of NuHealth, has praised NuHealth's financial condition, citing the infusion of federal aid for COVID-19 expenses.

But Barsky said NuHealth officials don't understand the severity of the problem. "It’s not about how they're doing at this point in time, we know why they have whatever cash they have. All of that is from one-time non-reoccurring events. All that does at best is forestall the period in which they run out of cash."

He continued, "What they don’t seem to understand is they have a problem going forward in spending more money than they're bringing in."

NuHealth chairman Edward Farbenblum said in an interview: "Fundamentally we agree with the report. We are working to put together a strategic plan and we do recognize the urgency and recognize the hospital's in dire straits."

In the next couple of weeks, Farbenblum said the administration will put forth a "robust plan."

On July 6, NuHealth issued a request for proposals seeking a "turnaround specialist." Farbenblum said experts would help NuHealth to "implement strategic initiatives," including ones that boost revenue and hospital data management, and also improve pharmacy billings, physician compensation structures and quality metrics.

Mike Fricchione, Nassau County spokesman, said in a statement: "While safety net hospitals across the nation are in distress, [NuHealth] must propose a viable operating plan in order to continue providing vital services to communities in need." Nassau backs $150.1 million in hospital debt.

NuHealth officials at the start of the year projected a budget loss of $116.2 million in 2021 before costs for pension and retirement payments and other liabilities are factored in.

Also Monday, NIFA officials approved a "memorandum of interim understanding" between the county and its police benevolent association, allowing for the implementation of a body-worn camera program. Officers are to be paid $3,000 to wear the cameras.

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