The corporation that runs Nassau University Medical Center owes the state $62.6 million in health care premiums for its employees and retirees, forcing administrators to find money for the back bills while struggling to fund day-to-day operations.
The late payments reflect long-standing budget problems at the Nassau Health Care Corp., also known as NuHealth.
Hospital experts say it could be a challenge to make up the arrears while keeping up with current expenses.
George Tsunis, who became chairman of the NuHealth board Feb. 1, told Newsday NuHealth had been “woefully behind” in its health care payments to the New York State Health Insurance Program.
Tsunis, an appointee of Democratic Nassau County Executive Laura Curran, told board members at a recent meeting administrators were going to “attack” the arrears.
“It’s a lot of money, but we’re going to start to chip away,” Tsunis said.
Michele Cusack, senior vice president and chief financial officer at Northwell Health, the state’s largest health care system, said by having to fund current operations while also making back payments, NuHealth’s “challenge is just being able to keep their head above water.”
“I think it’s going to be a challenge for them to be able to make up the arrears and stay current, given their current financial challenges,” Cusack said.
NUMC, with 530 beds, serves as Nassau’s public “safety net” hospital, providing care for many low-income patients who are uninsured or receive government assistance.
More than 50 percent of patients are on Medicaid and nearly 30 percent are on Medicare, while 6.5 percent are uninsured or pay their own expenses, officials said.
Officials said the 4,300 workers and retirees in the system aren’t in danger of losing their health care coverage.
Officials at several safety net hospitals, including Stony Brook University Hospital, Erie County Medical Center in Buffalo, Westchester Medical Center in Valhalla, and SUNY Downstate Medical Center in Brooklyn, said their institutions were not behind on their health insurance payments.
Tsunis said, “We still continue to provide very high-quality health care for our patients, and we are addressing the arrearage in health care premiums.”
Tsunis, a developer, said he discovered the arrears as part of an examination of NUMC’s operations.
Since taking over, Tsunis has vowed to tackle waste and corruption at NUMC.
Earlier this year, the NuHealth board ended contracts with lawyers and banned top employees from taking business trips to the Cayman Islands during annual reviews of the public benefit corporation’s self-insurance program, which is located there. To keep the Cayman location, NuHealth officials must meet outside the United States at least once a year. Tsunis said officials should meet at a Canadian airport in the future.
Last month, the board fired its president and chief executive Dr. Victor Politi for cause, without disclosing a reason to the public, before approving a nearly $215,000 separation package.
Tsunis disclosed the problems with the health care premiums to the board at an April 18 meeting.
Board member Charles Kilbride asked, “Why didn’t we know about it, and what are we going to do about it most importantly?” Tsunis said the information, when he discovered it, was “alarming to me, . . . and I thought that we should share this information.”
Tsunis asked directors to approve a new policy limiting lifetime health benefits for nonunion employees, which is “one step that we’re doing to bring some financial sanity to this particular construct, this health care and such.”
Jian Paolucci, a spokesman for the state Department of Civil Service, which administers the New York State Health Insurance Program, said NuHealth, “is actively making payments toward their outstanding balance.”
Paolucci said the state is working with the corporation, “to ensure that payments are applied on an ongoing basis so that employees and their dependents are able to maintain their health coverage.”
Monthly payments due to the state are about $6.6 million, Paolucci said.
Administrators at other Long Island hospitals say NUMC faces unique challenges.
Cusack said as a safety net hospital NUMC is, “trying to make a margin on government reimbursement.” The fact that NUMC provides free care or care that gets reimbursed at lower government rates makes “it a challenge for them to make a margin,” she said.
“When you’re having difficulty paying for today’s expenses, and you have the added burden of significant legacy costs — things that you have already used but haven’t yet paid for that sit on your balance sheet — it creates a challenging set of economic circumstances that leave the hospital with a limited ability to make investments going forward,” Tsunis said.
NUMC started out as Meadowbrook Hospital in East Meadow, which opened in 1935. It became Nassau County Medical Center in 1974. In 1997, state legislation formed the Nassau Health Care Corp., which was charged with operating the hospital, satellite health clinics, the A. Holly Patterson Extended Care Facility in Uniondale and the infirmary at the county jail in East Meadow. The hospital was renamed Nassau University Medical Center in 2000, and is no longer under Nassau County’s control.
Kevin Dahill, president and CEO of the Nassau Suffolk Hospital Council, a Hauppauge-based trade organization that represents 22 hospitals in Nassau and Suffolk, said the terms of union contracts also drive up costs.
Like other former county hospitals, NUMC is affected by “generous settlements that were reached years ago with the labor unions . . . They’re not unique as a public benefit corporation,” Dahill said. “All the public benefit corporations in the state have similar issues, in terms of having higher benefit costs because of these legacy settlements that were reached years ago.”
Costs are “not going down, so they have to find a way to deal with it, and it sounds like that’s what they’re trying to do,” Dahill said.
Jerry Laricchiuta, president of Civil Service Employees Association, Local 830, which represents 3,200 health system workers, said that “over the decades, if you look at the pay, the salaries of our professional staff, nurses, PA’s, X-ray technicians, we’re below the standard.”
He said that “it’s very hard to recruit” at the hospital and the Patterson nursing home, “because we don’t pay the same as other hospitals.”
NuHealth officials say they hope to cut the size of the health insurance arrears in half in July. The NuHealth board approved up to $56 million in short-term revenue anticipation notes for that purpose at its May 3 meeting. The Nassau Interim Finance Authority must approve the borrowing, according to NuHealth officials.
Also, a policy that took effect May 1 aims to curb NUMC’s rising health care costs.
Previously, nonunion workers could receive free health care for life if they worked at NuHealth for five years and retired at age 55 or older. Now, new employees must have worked in the health system for 20 years.
In 2013, union employees agreed to the same change when they approved their new contract. Laricchiuta, called it “a very large concession.”
“That was in order to make the culture of the hospital sustainable,” Laricchiuta said. Nonunion workers “should follow suit,” he said.