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NUMC faces 'looming' fiscal crisis, top hospital official says

NUMC treats a significant number of low-income and

NUMC treats a significant number of low-income and minority residents, many of whom are on Medicaid and Medicare. Credit: Howard Schnapp

The chairman of the public benefit corporation that runs Nassau University Medical Center warned of a "looming" fiscal crisis worsened by the COVID-19 pandemic, and said the hospital could run out of money in 11 months.

NuHealth Chairman Robert Detor said NUMC has authorized $10 million in unanticipated COVID-19 spending, and will spend $19 million over the next three months.

NUMC, a public "safety net" hospital, will have only $249,000 in the bank by the end of March 2021 without an infusion of tens of millions of dollars in outside aid, Detor said.

The corporation needs an injection of $57 million in cash to remain viable next year, he said.

Detor first issued the warning last Thursday night to NuHealth board members during a meeting via conference call. He stressed that there was a "shorter and shorter runway to come up with a solution."

Detor said while NUMC was "doing great things" in responding to the COVID-19 pandemic, "there is a looming crisis underneath the surface of the hospital operation that potentially could jeopardize the stability of the institution."

Detor called it, "almost a tale of two cities, with the COVID crisis and the way the staff has stepped up. It's been amazing, and impressive, and the community's got to be thankful and they should be thankful that NUMC was here."

But "on the flip side, in addition to the COVID crisis, the corporation is facing its own crisis."

NuHealth's fiscal problems have been worsening for years.

NUMC treats a significant number of low-income and minority residents, many of whom are on Medicaid and Medicare.

NuHealth posted a $46.6 million operating loss in 2018, compared with a $25.7 million loss in 2017.

NuHealth runs the NUMC, located in East Meadow, satellite health clinics and the A. Holly Patterson Extended Care Facility in Uniondale.

Nassau County backs $188 million in hospital debt.

Last Friday, NuHealth executed a $1.16 million contract with Alvarez & Marsal, a Manhattan health care consulting company that will work to prepare NUMC's application for federal reimbursement for pandemic care expenses.

Also, the county's financial control board, the Nassau Interim Finance Authority, which oversees hospital finances as well, is working to finalize a deal with Alvarez & Marsal to work as a "turnaround consultant" for NuHealth.

NIFA Chairman Adam Barsky said the contract will cost NuHealth between $900,000 and $1 million, with reimbursement expected from the federal government.

Jerry Laricchiuta, president of the Long Island region of the Civil Service Employees Union, which represents more than 3,000 NUMC workers, expressed concern that Alvarez & Marsal would serve as a "close-you-down company."

The company specializes in "turnaround, operations and performance improvement management" for corporations, according to the company's website. 

Laricchiuta noted Alvarez & Marsal's involvement in the "global wind down" of Lehman Brothers, after it filed for bankruptcy in the 2008 financial crisis. The company was able to repay creditors, beginning in 2012, according to the company's website.

Laricchiuta told Detor at the April 16 NuHealth board meeting, "We're teeing it up to leave the safety net business. I don't think we're on the same page as far as the future of this hospital. I want to see the light shining from the 19th floor down to the bottom, five years from now. I don't think you do … I don't think you believe we can do that."

Asked at the meeting if it were a conflict of interest for Alvarez & Marsal to work on federal reimbursements and also serve as NIFA's consultant, Detor said it was in NuHealth's "best interests" to work with them.

"The only thing I want is, and I think it's the obligation of the board of trustees, is to have a service that meets the needs of the community, that's financially sustainable … that exists," Detor said.

"To have an institution that might collapse isn't going to do the community any good," he said. "If there's a way to not have that happen, God bless it. I'm all for it."

Detor said before the start of the COVID-19 pandemic, NuHealth was in discussions with the state Department of Health about resolving the hospital's "liquidity crisis."

Now, given the state's budgetary issues, "I don't know where our negotiations stand, given the issue that the state is up against a financial wall," Detor said.

Detor said the state was "clear as we were talking to them that they weren't going to give us any money, unless we had some type of [financial] plan that was realistic, that was achievable, and it was in place."

Now, Detor said, the state's "ability to provide support may be unavailable, or may be limited or not sufficient to stabilize our operation."

"There's no plan right now to initiate those [negotiations] until we get through this crisis, which creates a shorter and shorter runway for us to come up with a solution," he said.