Nassau University Medical Center needs major overhaul to stay afloat, consultants say

The public benefit corporation that runs Nassau University Medical Center cannot survive without dramatic action including closure of the public hospital's emergency room, reduction of hospital staff from 3,400 to about 300 and sale of the A. Holly Patterson nursing home, consultants hired by the health system's financial control board said.

In a 43-page report, the consultants blame the problems on years of political turmoil inside the corporation, NuHealth, and failure to keep up with changing trends in health care.

The report says NuHealth cannot stay afloat beyond 2022, when it is expected to run out of operating cash, unless it overhauls NUMC — a 19-floor Level-1 trauma center on 51 acres in East Meadow — by eliminating almost all outpatient and inpatient care.

'While closure was not considered an operating model, it is still an option for the future of NHCC, should the governing body not elect to implement any of the other operating models and NHCC simply runs out of money to operate.'

 

Source: Alvarez & Marsal report

The bulk of NUMC's caseload would be transferred to the Long Island Federally Qualified Health Centers, a nonprofit with six main locations in Nassau County communities, and other centers at Nassau schools, according to the report obtained by Newsday.

As Nassau County's only public hospital, NUMC provides care to predominantly low-income patients who rely primarily on Medicaid, or lack health insurance.

Consultants Alvarez & Marsal of Manhattan also recommend that NuHealth sell the A. Holly Patterson Extended Care Facility, which is located in Uniondale and licensed for 589 beds.

The nursing home is expected to run losses of between $27 million and $35 million a year, according to the report.

'This is an enormous drain on NHCC resources for an entity that should be self-supporting. There are ample unoccupied long-term care beds in Nassau County that could readily absorb AHP residents. There is also an active market in New York for the sale of nursing homes.'

 

Source: Alvarez & Marsal report

The facility, "is an enormous drain on [NuHealth] resources for an entity that should be self-supporting," the consultants wrote.

Overall, NuHealth's "history is rife with missed opportunities to evolve and a failure to adopt new models of care for this community," the report said.

"This has yielded a financially nonviable system that cares for a large number of patients whose inpatient health needs would normally be served by a community hospital, not an academic medical center," consultants wrote.

'NHCC’s history is rife with missed opportunities to evolve and a failure to adopt new models of care for this community. This has yielded a financially nonviable system that cares for a large number of patients whose inpatient health needs would normally be served by a community hospital, not an academic medical center.'

 

Source: Alvarez & Marsal report

"Without a major shift in the care delivery model, continued federal and state financial support and a modernization of governance, the survival of [NuHealth] remains doubtful," the report says.

Ultimately, "only closure fully addresses the ongoing operating losses, but even that path fails to resolve the residual balance sheet liabilities … which are likely to exceed $1 billion," the report says.

"The ongoing financial losses and significant leadership turnover has resulted in the organization failing in its mission to serve Nassau County," the report says.

The consultants' recommendations, if accepted by the NuHealth board of trustees and approved by the Nassau Interim Finance Authority, would result in the most far-reaching overhaul of NUMC since its establishment in 1935 as Meadowbrook Hospital, a 200-bed general hospital.

But it is unclear if such dramatic steps will win the support of NuHealth trustees, local elected officials or leaders of the Civil Service Employees Association, which represents nearly all NuHealth's more than 3,400 union employees.

NIFA chairman Adam Barsky said he hoped county officials and NuHealth board members would take action.

'Doing nothing will ultimately guarantee that the hospital must close its doors.'

 

- NIFA chairman Adam Barsky

"The alternative to doing something is doing nothing. Doing nothing will ultimately guarantee that the hospital must close its doors," Barsky said.

"We don’t run the board — it’s up to the county and the board to make the changes, not us," Barsky said. "The county and the hospital need to decide how they're going to change the operating model so it can be sustainable on a long-term basis."

Barsky continued: "We’ve identified the issues, we’ve identified the financial challenges that they're facing, and we’ve given them various options to consider. The baton is now passed to them to go and fix it."

Robert Detor, NuHealth board chairman, said of the consultants' report: "There’s no surprises in it."

'If the board of NHCC takes no action, closure may be the only option, when cash balances are depleted, and the provision of care by NHCC will end, though high quality, and even expanding access to care will still continue through FQHC operation of the clinics and through any successor owner of AHP.'

Source: Alvarez & Marsal report

Detor, an appointee of Nassau County Executive Laura Curran, said "it's clear from the report, operating off the current platform, that without additional funding or without changes to how we function, the institution is not financially viable."

Asked how the health system would proceed, Detor said he would review the plan with board members. "I don't have the answer right now," he said. "There's some seeds of options in there that we might be able to develop."

John Durso, president of the Long Island Federation of Labor, AFL-CIO, and Roger Clayman, executive director, said in a joint statement: "We firmly reject any proposal to curtail the operations of these institutions and look forward to working with CSEA and our community partners to map a successful future for these health care providers."

'We firmly reject any proposal to curtail the operations of these institutions and look forward to working with CSEA and our community partners to map a successful future for these health care providers.'

 

- John Durso, president of the Long Island Federation of Labor, AFL-CIO (pictured), in a joint statement with Roger Clayman, executive director

Dr. Anthony Boutin, chief executive and president of NuHealth, said in a statement: "While the Alvarez and Marsal report touches on some significant health care issues in Nassau County, closing NUMC cannot be one of them. The new leadership, along with the expertise of our Department heads, have already begun to implement changes to better serve our patients."

Curran, a Democrat seeking reelection in November, said in a statement: "I support Nassau’s only safety net hospital. We must do everything we can to ensure that the communities that need its services most have access to quality health care. We will review the report thoroughly."

Under state law, the county executive is responsible for naming the chairman and appointing three members of the board, which can have 15 voting directors. Other members are appointed by the Nassau County Legislature or the governor.

Nassau County also backs $173 million in hospital debt. NuHealth carries $811 million in debt, largely for pension and health care costs for retirees.

The Alvarez & Marsal report examines six models for operating NuHealth. They include continuing as an academic medical center while eliminating services such as pediatrics, or becoming a "community hospital" with an emergency department and a small medical surgical unit.

But only two of the options are "potentially sustainable," according to the report.

Under both, officials would eliminate emergency room and medical/surgical inpatient service, sell the nursing home and cut the NuHealth workforce to between 290 and 310 staff members.

Under the first option, NUMC would gain state approval to operate as a behavioral health hospital emphasizing psychiatric and substance abuse treatment.

The second option involves NUMC operating as a behavioral health hospital and also a registered nonprofit.

'None of the options presented include the continued operation of a skilled nursing / long-term care facility.' 

 

Source: Alvarez & Marsal report

The consultants said leaders of the county's other major health systems stressed the "critical and essential role of the behavioral health program at NUMC … There is no facility that could assume the patient volume seen at NUMC."

The report says that, as NuHealth is constituted now, provision of emergency services, operation of the nursing home and governance of the health care system are major challenges.

Emergency services

About 77% of admissions to NUMC stem from emergency room visits. Heavy use of emergency services reflects "the high community reliance on the [department] as a primary site of care as many of these patients do not have a primary care physician or are concerned about cost," according to the consultants.

The report suggests the federally qualified health centers would be able to provide emergency services if the department at NUMC were to close.

Also, "nearby hospitals should be able to accommodate a majority of the [emergency department] volume currently seen at NUMC."

However, NUMC emergency department "volumes would likely stretch or exceed capacity at nearby hospitals at certain times," the report says.

Detor argued for operating an emergency room of some type at NUMC.

"Emergency room services are important, even though the volumes have decreased," Detor said. "To take the emergency room down now would put an undue burden on a lot of the surrounding hospitals."

Detor said "some type of emergency capacity should be in whatever solution we develop."

Boutin said closure of the emergency department "doesn't make any sense. Whoever thought of that is not really in health care — especially in this community, we’re known for our emergency department. The cops come here. The firefighters come here."

A. Holly Patterson Extended Care Facility

The nursing home, which operates in a single building located on a 63-acre campus, is experiencing occupancy declines, according to the consultants. The daily average census dropped from 453 in 2019 to 380, as measured in September 2020, for instance.

Patterson also has too large a proportion of patients who are on Medicaid — 79% compared with 11% on Medicare, Alvarez & Marsal said. Medicaid pays less than Medicare or most private insurance.

Detor said while NuHealth is implementing cost-saving measures at the nursing home, "it's a heavy, heavy lift" to continue operating the facility.

According to the report, there are "ample unoccupied long-term care beds in Nassau County that could readily absorb [Patterson] residents. There is also an active market in New York for the sale of nursing homes."

But Jerry Laricchiuta, Long Island regional president of CSEA, called Patterson "a must keep. You have almost 500 people who work there and we have almost 500 people who live there, and it’s been part of our Nassau County history for a long, long time."

Mike Fricchione, a Curran spokesman, declined to say specifically whether Curran supported the sale of A. Holly Patterson or closure of the NUMC emergency department.

NuHealth governance

NUMC’s "operating capabilities have been significantly hindered by turnover in leadership roles," the consultants' report says. "The hospital system has seen numerous changes to the executive leadership team in just the past three years."

'NUMC’s operating capabilities have been significantly hindered by turnover in leadership roles. The hospital system has seen numerous changes to the executive leadership team in just the past three years. 

The impact of this level of disruption and vacancy in the leadership team is felt throughout the organization.'

- Source: Alvarez & Marsal report

The "lack of stability and consistency" among executives, and turnover "at the Board level has contributed to an overall inability to effectuate meaningful change," according to the report. "There has been a lack of strategic planning, and execution of whatever plan has been put forth is delayed or lacking follow-through."

Consultants said they had spoken to leaders "of other health systems about possibly taking over NuHealth operations, forming a partnership, or in the event of closure or a downsizing, absorbing its patient load."

"None of them expressed interest in management or a major partnership, given the balance sheet liabilities, organizational structure and governance," the Alvarez & Marsal report says.

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.