Nassau Interim Finance Authority takes control of NUMC finances

The Nassau Interim Finance Authority on Tuesday took control of the finances of the public benefit corporation running Nassau University Medical Center, saying the hospital's condition "poses a material threat" to the county.

NUMC has struggled with financial and political challenges, including leadership turnover and persistent operating deficits.

NuHealth, the public benefit corporation, had a cumulative loss of $193.9 million between 2015 and 2018, according to a NIFA resolution that passed Tuesday night on a 6-0 vote.

Nassau County backs $188 million in NUMC debt.

Supporters say the public hospital plays a crucial role in the community, treating many lower-income, uninsured and minority patients.

The NIFA resolution noted recent turnover in the chair and chief executive positions, and expressed concern about "the fiscal stability and viability of" NuHealth and the hospital.

"The challenges facing the hospital are tremendous, and I think it's definitely within our responsibility," NIFA chairman Adam Barsky said at the meeting. "It's our obligation to provide as much oversight."

Some controls were designed to "make sure the hospital gets on the right course to continue to be viable to exist to provide the essential services that only they can do," Barsky said.

Chris Wright, a NIFA director, said: "It's not just the losses, the financial losses that the hospital has experienced. But either of equal or greater gravity is the rather erratic governance process that we've seen played out. We need to put spending and borrowing under some oversight on our part in order to keep that under control."

The takeover Tuesday night was authorized in a measure permitting the control board to withdraw a 2011 resolution exempting NuHealth from NIFA's contract review process.

The resolution allows NIFA, a state monitoring board that also controls county finances, to order NuHealth's chief financial officer to comply with its requests and instructions.

Barsky and designees can "take whatever actions they deem necessary or appropriate" to enforce the resolution placing NuHealth under NIFA's control. "Willful violation" of a valid NIFA order can result in misdemeanor charges, according to the resolution.

When NuHealth was exempt from NIFA oversight, the control board "did not believe [NuHealth] posed a material risk to the overall financial condition" of Nassau County.

But NIFA now believes NuHealth "poses a material threat" to the county and "increased scrutiny is now warranted," according to the resolution.

Jeremy Wise, NIFA general counsel, said, "we realized their financial condition was deteriorating."

Officials stressed NIFA will not run day-to-day operations of NUMC.

"NIFA is not taking over the hospital," Wise said at the meeting. "NIFA is merely proposing to make the hospital have similar operating procedures to those of the county."

Nassau County Executive Laura Curran and NuHealth's president have 30 days to present NIFA with "proposed guidelines" for contracts the medical center should submit for approval.

Until those guidelines are set, NIFA must approve:

• All personal service contracts with law firms, consultants and others exceeding $50,000.
• All employment agreements.
• All revenue contracts, including billing and collection agreements. The board does not intend to review contracts with medical suppliers, Barsky said.

The resolution also requires NuHealth CFO John Maher to submit documents to NIFA, including monthly financial statements, minutes of public board meetings and applications for borrowing.

Last week, Curran urged Barsky to move cautiously in addressing NuHealth's problems. 

Curran, a Democrat, pressed Barsky to allow NuHealth to "continue managing its own contracting process without the added steps of NIFA review."

But on Tuesday, Curran spokeswoman Christine Geed said, "by reviewing NUMC’s procurements and contracts, NIFA will get a clearer picture of the hospital’s finances. We want to see the hospital stabilized."

Barsky has said NIFA controls could lead to imposition of an employee wage freeze and requirements that NUMC submit contracts, budgets and union agreements to the control board for approval.

But Barsky said Tuesday he has assured CSEA Local 830, which represents more than 3,000 NUMC employees, that a wage freeze for hospital workers was not under consideration.

While NIFA plans to approve future labor agreements, the board does not intend to rescind an agreement struck with the CSEA in November.

"The reason we’re not contemplating a wage freeze is because the problems at the hospital are so bad that a wage freeze wouldn't even make a dent," Barsky said.

Howard Weitzman, a NIFA director and former county comptroller, expressed concern about the "revolving door" of leadership at NUMC.

Over the past two decades, Weitzman said, "the first thing almost every one of those CEOs did when he came into the hospital was to prepare a plan as to how they were going to compete for private patients in Nassau County. For 20 years, that hospital suffered losses because the egos of CEOs required that they could be the best in Nassau."

Weitzman added that the hospital needs big subsidies to stay in business.

"They can't compete with anybody in Nassau County," he said, "but they do have a mission to play, and they need to bring in ... a management team that understands that."

Jerry Laricchiuta, CSEA Nassau County Local 830 president, said "we're going to watch" and expressed hope that "NIFA can get the hospital on the right financial track."

In January, NIFA sought to hire a turnaround specialist to fix NUMC's fiscal problems. Eight firms have applied and NIFA officials are reviewing the submissions.

Also Tuesday, NIFA approved an 8 1/2-year labor contract designed to increase the number of detectives in the county by as many as 60 new recruits over the next year.

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler covers Nassau County government and politics for Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.