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Medical Emergency: NNY hospitals, in life-or-death fiscal straits, look at collaboration

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Six Northern New York hospitals are in a financial crisis, and several may need to consolidate services to survive.

But to do so will require communities to be willing to lose some of their hospitals’ identity, staff and services.

The struggling facilities are facing declining federal reimbursement rates, rising pension costs and service deficiencies, among other issues.

“Do I see in the future a more regional approach? Yes,” said Denise K. Young, executive director of the Fort Drum Regional Health Planning Organization. “Does everyone need a billing department and all these separate things to run them? I think not.”

With the cost of health care continuing to rise, she said, now is the time to push consolidation efforts to ensure health care always is available to north country residents.

“The bottom line is the importance that the patient gets care,” Mrs. Young said.

Richard A. Duvall, Carthage Area Hospital chief operating officer, said working with other hospital administrators should ensure health-care stability in the Carthage community.

“With the future of health care, working collaboratively is a must to help streamline expenses and costs,” he said.

Carthage Area Hospital has begun that process, a year after its former CEO Walter S. Becker was forced to resign. Under directorship of interim CEO Adil Ameer, the hospital transferred ownership of its Harrisville outreach clinic to Lewis County General Hospital, Lowville, and closed its Sackets Harbor clinic. Its school-based health centers now are run part time to cut costs.

Meanwhile, the hospital is progressing with its $9.5 million, 60-bed assisted living facility being constructed on Cole Road, town of Champion. Most of the project is being paid for by state funds. The hospital was awarded a $9.1 million state grant to pay down debt, which last year reached more than twice that amount.

Clifton-Fine Hospital, Star Lake, already has announced that it could face closure if it cannot exit from the state retirement system — a situation also plaguing Massena Memorial Hospital and Lewis County General Hospital. Clifton-Fine’s efforts to switch from a public benefit corporation to a nonprofit failed last year when the state Assembly would not vote on enabling legislation because of opposition by the Civil Service Employees Association.

Next year, the hospital’s pension bill is estimated at $800,000. As a nonprofit, it would be paying $220,000 for an employee retirement plan, Administrator Robert P. Kimmes said.

As the pension issue started to become more troublesome, Clifton-Fine Hospital simultaneously was able to open a $2.5 million addition in 2010 to replace a clinic that burned down and to add to the hospital a waiting area, an entrance, a central registration area and an elevator. The addition was paid for by a fundraising campaign, financing through Community Bank and a combination of local economic development sources.

As a town-owned hospital, Massena Memorial’s costs are expected to rise to almost $4 million annually soon.

At Lewis County General, pension costs have grown from $1.6 million in December 2009 to a projected $4.8 million for this December. Another challenge presented to Lewis County General is a reported year-to-date operating loss of about $980,000 through August. The hospital seeks to lower operating expenses by $500,000. Consultants recently were hired to review clinic operations and make recommendations to maximize work flow and revenue. The facility also is considering seeking a critical-access designation to secure higher Medicare reimbursement rates.

The financial situation at Lewis County General has been so dire over the past year that the hospital had to borrow nearly $6 million from the county, but a week ago the facility received $3.3 million in intergovernmental transfer funding, intended to reimburse health-care facilities partially for losses incurred on Medicaid, uninsured and charity-care patients.

Amid the hospital’s financial situation, a majority of physicians in late July cast a vote of no confidence in CEO Eric R. Burch, citing concerns about his managerial and leadership skills. Hospital administrators and managers are taking steps to address those issues.

Despite its fiscal problems, Lewis County General continues to work toward development of a dialysis clinic on its campus.

A LOSS OF IDENTITY

Samaritan Medical Center CEO Thomas H. Carman said one of the biggest obstacles for north country hospitals to overcome is their communities’ long-held image of their institutions.

“The problem is we’re all individual services and we’re fee-for-service,” Mr. Carman said. “We’re not necessarily in alignment. That’s when case management comes in and the health information exchange.”

A consortium of seven hospitals will map out an action plan. This group will share $3.8 million from the Healthcare Efficiency and Affordability Law for New Yorkers program, or HEAL, to collaborate throughout the next three years on a plan to keep Jefferson, Lewis and St. Lawrence counties’ residents healthy and to cut costs. Hospitals that have teamed up for the effort are River Hospital, Alexandria Bay; Carthage Area Hospital; Samaritan Medical Center; Lewis County General Hospital; E.J. Noble Hospital, Gouverneur; Clifton-Fine Hospital and Claxton-Hepburn Medical Center, Ogdensburg.

River Hospital CEO Ben Moore III, spokesman for the group, said the seven hospitals, known as the western section of the Northern New York Health Care Association, will be in a data study/planning period for about two years before any course of action can be taken.

“Our intent isn’t to close or consolidate. But if we operate as a system, it’d be better,” he said.

But Mrs. Young said the challenge in helping each hospital is that their struggles are unique.

Meanwhile, E.J. Noble Hospital has to work together immediately with other hospitals to resume its emergency and acute-care services. Those services haven’t been offered since Sept. 28, when the state Department of Health ordered the hospital’s lab shut down for deficiencies.

That move prompted fears that the hospital will shut down for lack of a revenue stream. The hospital lost $690,000 last year. Kinney Nursing Home, which is affiliated with the hospital, lost $115,000 last year.

“We’re soliciting a line of credit from our bank,” said Dr. Timothy J. Monroe, a veterinarian and hospital board president. “We haven’t received a response yet. That will better tell us whether we can meet our obligations.”

In tough financial times, E. J. Noble still was able to unveil earlier this year a $11.2 million, 34,000-square-foot wing that provided patient rooms, treatment areas and offices. The project was financed by a civic facility bond through the St. Lawrence County Industrial Development Agency’s Civic Development Corp.

Patrick J. Kelly, the agency’s executive director, said he was unsure what would happen to the debt if the hospital were to close.

“We want to see the hospital back in operation,” he said. “We expect that’s going to happen.”

A STRUGGLING ECONOMY

Massena Memorial Hospital also has not been immune from challenges. The closure of the General Motors Powertrain plant caused the hospital to lose about $2 million in revenue per year, according to CEO Charles F. Fahd II.

While the economy has declined, so has the number of patients paying with private insurance.

“This has been a difficult year for everybody, and it’s only going to get worse,” Mr. Fahd said.

While the hospital experienced a $1.6 million loss through August, officials broke ground earlier this year on a $3.9 million, 20,300-square-foot medical building.

Like other north country hospitals, Massena Memorial continues to add new services for patients to try to retain those who might otherwise go outside the area for care. Recruitment and retention of specialty physicians is a constant challenge for all north country hospitals.

Hospitals being proactive about those situations, Mr. Moore said, is just like routine preventive care patients need to continue to be healthy. With state approval, River Hospital closed its Medicaid-reimbursement reliant skilled-nursing unit in 2010 before it faced losing as much as $812,000 that year alone. The hospital has since focused on money-making outpatient visits to improve financial stability, but Mr. Moore said additional measures will be needed to ensure communities along the St. Lawrence River that River Hospital is here to stay.

“The slash of Medicaid/skilled nursing reimbursement rate would have put the entire institution under,” Mr. Moore said. “Even though that wasn’t a pleasant experience, it was a wake-up call for us to be extremely vigilant. You just can’t make mistakes on the financial end.”

Because there are several immediate crises, community members may expect to see immediate solutions to problems. Hospital administrators, however, say that while some are being worked through, it’s the bigger picture that really will shape hospitals’ sustainability plans and health-care delivery for patients.

Mr. Carman said north country hospitals already have begun that alignment process. Specifically for Samaritan, he said, the board took a look at succession planning to ensure “we had the bench strength to reach out to others” in the future.

“We all have respect for other institutions, and we appreciate the value they bring to their communities,” Mr. Carman said. “This board is in tune to having those collaborative relationships. We’ve done smaller projects over time because it was the right thing to do.”

He said Samaritan Medical Center has been committed to being a team player, and its board has looked at all options from hand-shake deals to mergers. Samaritan has provided consulting to Clifton-Fine and E.J. Noble hospitals, and information technology services to River Hospital. Samaritan also entered into a receivership with Mercy Care Center of Northern New York, which ensured the Stone Street facility remained open until early next year when Samaritan’s 288-bed skilled-nursing and assisted-living facility opens.

Mr. Carman said while health care systems are evolving nationwide, this state “seems to be behind the ball.” That is something the north country is trying to change.

Coordination of the HEAL grant will be done by the planning organization. HEAL funds come about 14 months after the state health commissioner visits the north country, Mr. Carman said, encouraging hospitals to work together.

“Things are moving toward stability,” Mrs. Young said. “I think what people need to know is there is and has been proactive work with the seven hospitals we’ve worked with on how they can better manage and have stability in the system.”

Times staff writers Steve Virkler and Martha Ellen and Johnson Newspapers writer Brian Hayden contributed to this report.


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