NUMC saw turnover in CFO job after taking over insurance plan

The parent company that runs Nassau University Medical Center cycled through five chief financial executives tasked with managing its budget during the five-year period when previous leadership allegedly failed to set aside enough money for its medical malpractice liabilities, the cause of a new $110 million loss disclosed earlier this month. 

Since longtime CFO John Maher was terminated in June of 2020, after having led the health system's finance department for eight years, the office has been marked by high turnover — with three different executives leading it from 2023 to 2025, earning salaries between $225,000 and $450,000, according to payroll records. 

The turnover came as executives took more responsibility for the company's medical malpractice insurance, which current leadership says led to the $110 million shortfall. Such turnover, experts in healthcare finance and at least one former executive say, makes it difficult to adequately track the more than 100 medical malpractices cases that weren't properly accounted for. 

From 2020 to 2025, the health system's leaders took on the job of overseeing and reporting the reserves for malpractice payouts, a function previously performed by a third-party vendor.

The role was to project the cost of malpractice suits brought against the hospital and its doctors and assess the risks of going to court. Instead, cases were delayed and payments weren't tracked allowing losses to build up in an offshore, captive insurance account in the Cayman Islands from which medical malpractice cases were to be paid out, current hospital officials allege.

“It should go without saying that if you are running an organization that’s accountable to the public, when you have litigation of any kind you must handle it responsibly because that could then get passed on to the taxpayer,” said Bill Hammond, a healthcare analyst and senior fellow at the Empire Center for Public Policy, a fiscally conservative think tank based in Albany, said. 

As an internal probe aimed at sizing up the problem is underway, it is still unclear how a hospital more than $1.4 billion in debt with nearly a half dozen different monitoring entities in place finds itself with an unexpected $110 million shortfall.

Former chief executive officer Megan Ryan, through a spokesman, told Newsday last week "the captive, NHCC, Ltd., was managed by the CFO and the finance department; it was never managed by legal" and has rejected all allegations of mismanagement. Prior to her appointment as CEO, Ryan spent a decade at the hospital as chief compliance officer and general counsel. 

 Revolving door

Newsday this week made several unsuccessful attempts to reach the individuals who from 2020 to 2025 held the title of chief financial officer or director of finance: Maher, a whistleblower who alleged he was terminated because he refused to inflate the number of COVID patients during the pandemic; Richard Rank, who served from May 2020 to April 2023; John Pavuk, who stayed only five months from May to September 2023; then Robert Brown of the Marwood Group, a healthcare consulting firm the hospital hired to manage its finances who stayed for the rest of 2023; and Perry Sham who served from January 2024 to May 2025.  

Richard Kessel, new chairman of the hospital board of directors, said the prior administration under Ryan "did a terrible job of running a hospital." 

"The fact that they had five CFOs in five years brought it to the brink of closure, there's no question about it," said Kessel, who was appointed by Gov. Kathy Hochul. "We inherited a mess and that mess was created. We are going to make sure that never happens again." 

Hochul through the 2025 budget restructured the governance of Nassau Health Care Corporation, which runs 530-bed NUMC in East Meadow, a nursing home, health centers and inmate care at the county jail.   

One of the reasons you would have outside management of an offshore captive account is that it is "so important to have someone who is right on top of that," said Hammond. 

 Common arrangement

NUMC likely saved money by self-insuring against malpractice claims through its Cayman captive, a common practice for large health systems seeking an alternative to buying commercial U.S. insurance. Offshore captives come with fewer regulations and if managed well can earn money for the institution in good years. But the risks must be managed well, experts contend.     

For now, NUMC has assumed $65 million of the shortfall and the rest will fold into the hospital's long-term planning, current CEO Thomas Stokes told Newsday.

Stokes this week told Newsday that going forward his team will take "a hard look" at whether operating a captive out of the Cayman Islands is the right choice.

"From there we will organize ourselves around what the new captive should look like — its structure, its governance, and its oversight. That work is already underway," Stokes said. 

By Candice Ferrette

candice.ferrette@newsday.comcandiceferrette

Candice Ferrette covers Nassau County government and politics on Long Island. She has been a reporter at Newsday since 2011.