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Massena Memorial Hospital moving ahead with privatization


MASSENA - The Massena Memorial Hospital Board of Managers is moving forward with plans to turn the facility into a private not for profit hospital.

Following an executive session this week, board members agreed by a 9-0-1 margin to send their recommendation for privatization to the Massena Town Council, which will have the ultimate say in the hospital’s status. Board member Loretta Perez abstained from the vote, and board members David MacLennan and Ed Fay were not present.

“They did vote to move forward with the 501(c)(3). Now it’s in the hands of the town board for their decision,” MMH spokesperson Tina R. Corcoran said.

Representatives from FreedMaxick Healthcare, consultants hired by the hospital Board of Managers to study possible privatization, said last month that the hospital would be bankrupt by 2017 if they maintained the status quo.

In 2017 the hospital would be $3.2 million in the red for cash and equivalents. The hospital would have $53 million in operating revenue, but $56.2 million in operating expenses, and the net loss in income would be $3 million.

In 2018, the hospital would be $7.8 million in the red for cash and equivalents. Operating revenue would $54 million and operating expenses would be $57.9 million, with a net loss in income of $3.8 million.

Town officials have said that, should the hospital end up bankrupt, the financial burden may fall on the taxpayers.

“People don’t want an additional thing added to their homeowner’s tax,” Ms. Corcoran said.

On the other hand, Certified Public Accountant Alan Gracie told hospital board members in February the hospital would have a small operations loss in 2018, but would have $6.6 million in cash and equivalents on hand if they changed their status to a not-for-profit organization. They estimated operating revenue of $53.9 million and operating expenses of $54 million, for a net income loss of $27,000.

The report provided by the FreedMaxick representatives was in draft stage in February, but Ms. Corcoran said they’re expecting the final report in the next few days.

“We’ve asked them to send us a copy of the report. We’ll probably have it on our website ( by Monday if people want to review it,” she said.

During their presentation, Freedmaxick representatives had shared different scenarios with the board if the hospital chose to maintain the status quo or move forward with privatization.

“The board evaluated it and said, for us to maintain a viable hospital, this is what we need to do and this is the process that will have to be done,” Ms. Corcoran said. “We don’t have a time line because you don’t know how long the process is going to take.”

She said if the town board elects to move forward with privatization hospital users will see no difference in their health care.

“Nothing will change, It will be just like every other hospital, all of our neighboring facilities. We have a great facility; we have a great staff. Health care is important to our community,” she said.

Town Supervisor Joseph D. Gray said he was notified on Tuesday that the Board of Managers had voted to move forward with the privatization. Now it’s up to the town board to make a decision.

“Nothing can happen until the town board says yes or no. Certainly there are some members of the town board who still have questions. I think they’ve been doing a lot of research and trying to get the information they need,” Mr. Gray said.

He said that, although changes at the hospital could save some money, it wouldn’t stave off the reported debt the hospital would face in the years ahead.

“You make a change here, you save $200,000. You make a change there, you save a half a million. I don’t see $4 million,” he said, referring to projections made by MMH Chief Executive Officer Charles F. Fahd II on how much they would need to cut annually if they maintained the status quo.

Mr. Gray attributed a large part of the hospital’s financial picture to rising pension costs. Mr. Fahd had previously said that what was a $124,200 contribution to the state’s pension program in 2002 jumped to $4.4 million in December 2013, with a projected $4.8 million contribution in December 2014.

Mr. Gray said that, after he took office in 2010, he tried to warn hospital officials that the increase was coming.

“In 2011 I started talking to the hospital and told them, you’re going to have a huge pension problem. They said no we’re not. I don’t like to say I told you so, but I was right. It was a snowball effect. The state pension was rolling downhill and getting bigger and bigger,” affecting municipalities, schools and other organizations like Massena Memorial, he said.

“So many people ignored it for too long, including the hospital,” Mr. Gray said. “I have not seen any evidence of savings that can erase the impact of the pension payment.”

But Civil Service Employees Association spokesman Mark M. Kotzin said while pension costs had been an issue, they are likely to be less of a financial burden in the future.

“I know a lot of the assumptions are that future costs for the hospital involve the pension going up. Pension costs are now going down. The state Comptroller’s Office released projections that they were going down,” Mr. Kotzin said. “When the economy tanked in 2008, contribution levels were still rather low. They had to raise them exponentially to make up for the loss of the market.”

Now, he said, the market has recovered and health care reforms have produced some savings.

“The end result is 2014 and 2015 are really the last years that the comptroller projected any increases. Following that, they’re projecting decreases to pension costs,” Mr. Kotzin said.

He said rising health care costs are also less of an issue for employers with the introduction of the Affordable Care Act.

“The other big driver of many of these cost factors is health insurance. With the implementation of the Affordable Care Act, the projections are that health care should be going down. The union offered cost savings in health insurance that were rejected by the hospital administration on more than one occasion. They can talk about needing to lower costs, but when we offered it they didn’t want to do it. We’re still offering it,” Mr. Kotzin said.

“We can make changes to save the hospital plenty of money and perhaps enable it to remain owned and operated by the public,” he said.

At this point, Mr. Gray said, the town board will need to study the consultant’s report and make a decision about the hospital’s status. Part of that is looking at what the tax impact would have been if the town had to absorb the hospital’s last three years of deficits, information they would want to share with residents.

“The short answer is I don’t think anybody thinks the hospital can stay public long-term. The hospital board obviously wants to move things along as quickly as possible. The town board needs to think about the best course of action and time frame,” Mr. Gray said.

At the same time, he said, they also want to ensure that, if they move toward privatization, it’s not detrimental to jobs and salaries of the hospital’s current employees. They also need to address how to take care of employees who have contributed time toward their state retirement.

Mr. Kotzin suggested that the full report by Freedmaxick be examined thoroughly before any decisions are made.

“The bottom line from our perspective is that they were making a decision based on the consultant’s report. That report, to the best of my knowledge, was never made public. We had asked for a copy of that report. We were told it was only in draft format and we would get it when it was finalized,” he said.

“The real question all along here is there has been quite a bit of public opposition to giving up local control of the hospital. Did the hospital board simply ignore that and make a decision based on a report that was never provided to the public? It’s the public’s hospital. The public has a right to see the report, digest it and weigh in on its content. We believe that the citizens of Massena, the taxpayers, have a right to know what’s in that report and have all the facts before any decision is made that could give up local control of their hospital,” Mr. Kotzin said.

He also questioned the accuracy of the numbers in the report, which he said CSEA plans on examining once they obtain a copy.

“Sometimes when you get a consultant and pay them to give a report, you get what you pay for. It doesn’t mean the numbers are accurate. We have people that could digest the numbers to see if they sound correct,” Mr. Kotzin said.

“Ultimately the decision seems irresponsible that the hospital board would go ahead and make a determination without all of the information being made public. I hope town officials are really looking at all options, not just going to a private operation and giving up control,” he said.

CSEA employees reported to Massena Town Council members last week that they had been told they would not be able to receive a final copy of the report until April 10. But Councilman John F. Macaulay said the plan was to have a public presentation on April 10.

“At the town board meeting, it was pointed out there would be a public meeting on the 10th. I expect there will be standing room only at the town hall for that meeting. It will be the first look the community can have in general on the report we get from Freedmaxick,” Mr. Gray said.

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