The public benefit corporation that runs Nassau University Medical Center suffered a record operating loss of $135.6 million in 2021, according to a new audit that prompted warnings the institution may run out of cash by the end of next year.
For the fourth straight year, outside auditors warned that the corporation, NuHealth, was unlikely to survive as a "going concern."
"They're basically insolvent," Adam Barsky, chairman of the Nassau Interim Finance Authority, which controls NuHealth finances, told Newsday last week.
NuHealth losses "widened from one year over the next, and their cash position is lower and they are on a course to run out of cash by the end of 2023," Barsky said.
"It just seems to be getting continually worse, and it's a significant risk for the county being that the county is guaranteeing their bonds and may ultimately be the backstop to have to bail them out," he said.
Nassau County guarantees $131 million in corporation debt.
Dr. Anthony Boutin, chief executive and president of NuHealth, told Newsday in a statement: "The 2021 audited financials reflect the impact of a drastic and unacceptable decrease in New York State aid to [NuHealth] from 2020 to 2021 … "
During the period, "our patient revenue, payroll and other operational costs remained flat, which is a testament to the hospital's outstanding staff," Boutin said.
"We have faced a range of complex fiscal and management challenges for many years and as a result, [NuHealth's] new administration is in the process of developing a multifaceted fiscal management plan to finally help strengthen the long-term financial health of the hospital," Boutin said.
The report by Grant Thornton, an auditing firm based in Manhattan, added to a string of audits chronicling NuHealth's deteriorating fiscal condition over the past five years.
The corporation's operating deficit was $25.7 million in 2017; $46.6 million in 2018; $63.97 million in 2019; and $102.3 million in 2020, according to past audits.
The $135.6 million deficit last year amounted to 25.8% of the corporation's $523.6 million budget, according to the report released last week.
NUMC, which NuHealth operates along with the A. Holly Patterson Extended Care Facility in Uniondale, serves large numbers of patients who are uninsured or on Medicaid, which reimburses at lower rates than private insurance.
Over the years, outside experts have suggested fiscal fixes such as dramatic cuts in hospital staff, which employee unions and many county legislators opposed.
In addition, NUMC has faced strife on its politically appointed board.
The Grant Thornton auditors blamed the sharp increase in the deficit last year largely on declines in state and federal funding.
NuHealth operating revenue fell by $77 million from 2020 to 2021, auditors wrote.
That reflected steep drops in funding in 2021 from the federal CARES Act and New York's Delivery System Reform Incentive Payment program.
Between 2020 and 2021, CARES Act reimbursement for medical providers for costs related to the COVID-19 pandemic dropped from $40.9 million to $8.9 million, auditors said, as the severity of the health crisis lessened.
The $8 billion state DSRIP program provided funding to hospitals in New York based on their ability to meet efficiency and performance goals.
The program offered grants to encourage health care providers to divert patients from emergency rooms to smaller health care facilities, when appropriate.
From 2015 through 2020, DSRIP provided a total of $179.6 million in subsidies to NuHealth, according to data provided by Nassau County.
In 2020, the last year of the statewide program, NuHealth received $50 million from DSRIP.
The program ended March 31, 2020, after the federal government denied New York's request for a waiver to continue administering the program.
At the time, then-Gov. Andrew M. Cuomo, a Democrat, complained the decision by the Republican administration of then-President Donald Trump was part of a pattern of political retribution against New York.
The federal Centers for Medicare and Medicaid Services said it had alerted the state as early as 2016 that the program would be "phased down through March 31, 2020."
Nassau County Executive Bruce Blakeman told Newsday last week that cuts in state aid drove NuHealth's cash shortfalls last year.
Blakeman, a Republican, said NuHealth officials should work to improve revenues and operations.
But "the fiscal problems at the medical center [are] directly related to the gradual defunding of the hospital by the state, based on a plan that they have to close NUMC, because there's no other reason they would continually defund NUMC," Blakeman said.
"The only thing that I can say is their lack of investment in the hospital is indicative to me that they want to close it," said Blakeman.
"The story here is not about their management; it's not about the intricacies of how they run the place," Blakeman said.
"The lack of funding that this hospital has from one year to the other — they've created a structural imbalance that no business organization could recover from," Blakeman said.
Democratic state lawmakers have denied they want to close NUMC.
State Sen. Kevin Thomas (D-Levittown), whose district includes the NUMC campus in East Meadow, noted inclusion of $1.15 billion in the current state budget for "distressed" hospitals. Part of the funding can go to NUMC, Thomas said.
"The county executive needs to do more work than to point fingers. He needs to do more to make sure this hospital does not shut down," Thomas said of Blakeman.
Requests for comment to the office of Gov. Kathy Hochul, a Democrat, weren't returned Friday.
In addition to the operating losses, auditors warned about NuHealth's liabilities, which totaled $1.057 million in 2021, compared with $917 million in 2020.
The obligations include payments to thousands of retirees for pensions and retiree health care premiums, according to the audit.
Blakeman rejected one possible salve for NUMC's finances — restoration of the $13 million annual county subsidy for the hospital that former Nassau County Executive Edward Mangano, a Republican, killed as part of an effort to balance Nassau's budget.
"The county doesn't have the resources to do that; we don't have the tax revenue that the state does," Blakeman told Newsday.
But he said, "I would keep an open mind to it, if I knew that there was a long term fiscal commitment from the state."