The public benefit corporation that runs Nassau University Medical Center could run a deficit of up to $197 million next year without significant outside subsidies, and must change the way it does business in order to survive, a consultant for the hospital's financial control board has found.
NuHealth, which runs Nassau University Medical Center in East Meadow, faces large annual deficits for the foreseeable future, and "cannot continue operating as it currently does and expect to grow its way out of its financial problems," consultant Alvarez & Marsal, of Manhattan, said in a 38-page report.
The report, commissioned by the Nassau Interim Finance Authority, a state board that controls NuHealth's finances, said NuHealth faces an operating loss of $112 million to $197 million in 2021.
"Sometimes you find a place that has been so undermanaged, that when you do a productivity report, you are able to close the gap. In this case, we’ve got a system where the gap is larger than we can find in terms of opportunities," Martin Winter, managing director at Alvarez & Marsal, said in an interview.
"It’s not sustainable the way it’s operating," Winter said.
"What we’re looking at now," he said, are "some options that would be sustainable for" NuHealth.
Asked about the report, Dr. Anthony Boutin, NUMC's president and chief executive, said the hospital was benefiting from some revenue increases and should have enough cash to operate through 2021.
NuHealth Chairman Robert Detor said staff were "reviewing the report and it will take some time to digest it and respond to it."
NIFA and Nassau County officials have grown increasingly concerned about operations at NUMC, which has struggled with persistent operating budget deficits and leadership turnover.
Nassau County guarantees $173 million in hospital debt.
NUMC, which currently has a daily patient census of about 330, faces challenges similar to those of other safety net hospitals that rely heavily on federal and state subsidies. It treats many low-income patients on Medicaid, which reimburses the hospital at significantly lower rates than private insurers or Medicare could pay.
NIFA, which took over the hospital’s finances in February, hired Alvarez & Marsal to examine NUMC's financial operations, as the control board sought to reexamine the role NUMC should play in the community.
The consultants are reviewing "the strategic direction" of NUMC, Winter and managing director Larry Kaiser wrote in the report to NIFA chairman Adam Barsky.
The consultants' report outlined ways to generate an extra $32.8 million over the next 15 months.
According to the report:
• Immediate action is needed to improve patient satisfaction scores. NUMC in July received a one star rating, the lowest of a possible five, on the question from the federal Centers for Medicare and Medicaid Services.
• More staff hiring could be beneficial, but the high cost would increase the risk of "further eroding operations."
• The hospital should improve physician productivity, and cut down on overtime.
• The A. Holly Patterson Extended Care Facility in Uniondale, which NuHealth operates, so far in 2020 has posted an "unsustainable" loss of more than $17 million. The nursing home should take in more complex cases, such as patients with HIV and those needing hemodialysis, that reimburse the facility at higher rates.
• The nursing home is treating too many patients who are reimbursed by Medicaid and should attract more patients on Medicare. The daily reimbursement rate under Medicaid is $285, compared with $521 for Medicare.
Winter declined to discuss long-term turnaround options, calling it "premature to put things on the table."
Barsky said NIFA originally asked Alvarez & Marsal to identify potential savings at NuHealth facilities. But the consultants ultimately found that even if the corporation "implemented all these enhancements, it wouldn't be enough, and that the current operating model of the hospital is not sufficient to sustain itself on an ongoing basis."
Barsky continued: "What are potential options? What are potential things that can be done in order to make the hospital be able to continue providing critical services in the community in which it serves on an ongoing basis?"
NIFA hired in Alvarez & Marsal in May under an $845,000 contract.
NuHealth also has a separate, $1.16 million contract with the firm to handle the corporation's application for federal reimbursement for coronavirus expenses.