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Massena Memorial Hospital moving ahead with privatization

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MASSENA — The Massena Memorial Hospital board of managers is moving forward with plans to turn the publicly owned facility into a private, nonprofit hospital.

Following an executive session this week, board members voted 9-0 to send their recommendation for privatization to the Town Council, which will have the ultimate say.

The hospital, struggling with escalating state pension costs, lost $3.3 million in 2013.

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

Board member Loretta B. Perez abstained from the vote, and board members David M. MacLennan and Edward J. Fay were not present.

Representatives from Freed Maxick 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 it maintained the status quo.

In 2017, the hospital would be $3.2 million in the red for cash and equivalents. It 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 might fall on the taxpayers.

“People don’t want an additional thing added to their homeowner’s tax,” Mrs. 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 it changed its status to a nonprofit 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 Freed Maxick representatives was in draft stage in February, but Mrs. Corcoran said the board is expecting the final report in the next few days.

“We’ll probably have it on our website (www.massenahospital.org) by Monday if people want to review it,” she said.

Mrs. Corcoran said the hospital doesn’t have a timeline for the possible changes because it doesn’t know how long the process would take. She said if the hospital is privatized, users will see no difference in their health care.

“Nothing will change. It will be just like every other hospital ... 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 Tuesday that the board of managers had voted to move forward with the privatization. Now it’s up to the Town Council 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 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 hospital Chief Executive Officer Charles F. Fahd II on how much it would have to cut annually if it maintained the status quo.

Mr. Gray attributed a large part of the hospital’s financial picture to rising pension costs. Mr. Fahd previously had 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 this December.

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.’... The state pension was rolling downhill and getting bigger and bigger,” affecting municipalities, schools and other organizations such as 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.

“The state comptroller’s office released projections” that pensions were going down, Mr. Kotzin said.

@$ID/NormalParagraphStyle:He also said health care costs also are less of an issue with the introduction of the Affordable Care Act.

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

“There has been quite a bit of public opposition to giving up local control of the 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,” 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 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 Freed Maxick,” Mr. Gray said.

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