Top officials at Nassau University Medical Center will be barred from spending two weeks a year in the Cayman Islands at hospital expense under one of a series of resolutions unanimously approved Thursday night by the Nassau Health Care Corp. board, its chairman said.
The resolutions are intended to cut costs, prevent corruption and increase public disclosure of the hospital’s actions, said George Tsunis, chairman of the board of the public benefit corporation, known as NuHealth, which runs the East Meadow medical center and related facilities.
One resolution ends the practice of sending three hospital officials to the Cayman Islands for a week during Thanksgiving and a week in February to discuss the health care corporation’s offshore self-insurance facility, Tsunis said.
Like other hospitals, NuHealth set up a limited liability company called NHCC LTD in the Cayman Islands for tax purposes to self-insure for malpractice and general liability claims. The hospital’s chief executive officer, chief financial officer and chief operating officer are the company board members. To maintain the Cayman location, company officials must meet at least once a year outside the United States.
The hospital usually sent all three board members to the Cayman Islands twice a year, Tsunis said.
The new resolution calls for only two board members to meet once a year for one day at an offshore location and be reimbursed “for reasonable and customary travel expenses.”
Officials should meet at a Canadian airport and, Tsunis said, stay at a Holiday Inn rather than a luxury hotel.
NUMC is a “safety net” hospital that should adhere to federal expense guidelines and not pay for lavish trips, Tsunis said.
Officials did not have an immediate estimate of the savings. “It’s more the optics than the actual dollars,” Tsunis said. “There needs to be an overall respect of the taxpayer.”
Terry Lynam, a spokesman for Northwell Health, said such “captive” self-insurance companies are “very common,” not just among health care organizations but for large companies from different sectors, as a way of managing risk.
He said Northwell’s self-insurance company is domiciled in Bermuda. He acknowledged that offshore company rules require at least one annual out-of-country meeting.
“We typically have one meeting a year,” Lynam said. “It is literally a one-day visit.”
Rachel Moir, captive and risk finance product manager at International Risk Management Institute in Dallas, said places such as the Cayman Islands and Bermuda are popular for establishing self-insurance companies because they’ve allowed them for a long period of time.
Moir said more U.S. states, such as Vermont, have enacted legislation to allow creation of captive insurance companies within their own borders.
Tsunis also said NuHealth on Thursday reduced the use of outside legal firms in an effort to save money by having the hospital’s general counsel handle most legal matters in-house.
The new policy will require the general counsel, when necessary, to authorize in writing any outside legal work to firms previously approved by the hospital board. Firms that do not have written authorization will not be paid.
The NuHealth board also enacted new anti-nepotism disclosure requirements for hospital trustees, vendors and employees, and adopted anti-solicitation guidelines that outlaw gifts to trustees or employees from potential vendors and contractors.
Tsunis said he developed NUMC’s no-gift plan with attorneys for County Executive Laura Curran.
Curran has signed an executive order that prohibits county employees involved with procurement or contracting procedures from accepting gifts of any kind from county vendors, not even a cup of coffee.
The board also directed the hospital’s finance department to audit its philanthropic arm, the NuHealth Foundation, for the years covering 2014 through 2017.
Tsunis said hospital finances continue to be tight as NuHealth faces tens of millions of dollars in liabilities for accrued employee time, health care and pensions.
“This is a cash cow without the cash,” Tsunis said. “We have a very perilous position here.”
The hospital, which treats low-income people, receives state aid even though Nassau County ended its subsidy several years ago. However, the county is liable for more than $242 million in hospital long-term debt if NHCC defaults.
The resolutions are part of the board’s “ongoing transparency and disclosure efforts,” Tsunis said.
“This is essential for credibility. The taxpayers of Nassau County need to be assured that we are protecting their tax dollars and operating at the highest ethical levels.”
Tsunis has eliminated 11 appointee jobs and two contracts for a total cost of $2.34 million since he was appointed by Curran to head the hospital board last month.
With David Reich-Hale