NuHealth posts $46.6M operating loss for 2018

NuHealth, the public benefit corporation that oversees Nassau University Medical Center, posted a $46.6 million operating loss in 2018, up significantly from $25.7 million in 2017, new financial statements show.

The operating loss was $31.2 million in 2016, $58.5 million in 2015 and $17.4 million in 2014.

An audit of the health system, which had a $587.6 million operating budget last year, was done by Grant Thornton LLP, a Manhattan-based accounting and consulting firm.

NuHealth Chairman George Tsunis attributed the big year-to-year increase in operating loss in part to the settlement of lawsuits that had been accumulating for many years. In addition to contractually mandated step increases and higher health-care premium costs, “part of the operating loss were insurance settlements on matters from many years ago that we decided to finish and expense” in 2018, Tsunis said.

“These are prior obligations that were allowed to be kicked down the road and we felt the responsible thing to do was to take them,” said Tsunis, who was appointed by Democratic County Executive Laura Curran and took the post in February 2018. NuHealth settled “a disproportionately high amount” of claims in 2018, Tsunis said.

He declined to elaborate on the nature of the settlements.

While operating revenues increased by $2.2 million in 2018, expenses rose by $37.4 million, to $602.4 million, auditors wrote. The increase was mostly because of increases in pension costs and “other post-employment benefit” expenses, along with increases in self-insurance liabilities, auditors wrote.

Also, salaries increased by $4.8 million to $267.9 million, from 2017, the report said.

The audit noted that NuHealth received about $53.8 million from the state Department of Health for Medicaid Disproportionate Share Hospital payments that applied to prior years, but NUMC officials “determined that a portion” of the money was “overpaid” because of “an issue relating to the calculation of the payments.” NuHealth is calculating the overpayment, the auditors wrote.

Auditors said NuHealth “has experienced recurring operating losses” and “is dependent on the continuation of federal, state and local subsidies, certain of which are scheduled to end or be reduced. These matters raise substantial doubt about NHCC’s ability to continue as a going concern.”

Under a “going concern,” auditors prepare financial statements expecting a company to continue operating in the near future, according to the American Institute of Certified Public Accountants. Auditors can be tasked with determining whether “substantial doubt exists about an entity’s ability to continue as a going concern for a reasonable period of time,” according to the institute.

Tsunis said that if the federal DSH program and the state’s Delivery System Reform Incentive Payment (DSRIP) program end in 2020, “that would mean the expiration of annual grants over $100 million” to NUMC. He said, “Whereas I am hopeful, if not confident, that these programs will be restored in some fashion, they as of today have not, and that is the reason why our auditor gave us a ‘going concern’ ” warning.

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler is a deputy editor for the towns department at Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.