Audit: Nassau University Medical Center logged $142M deficit last year, second-largest in its history

The operator of Nassau University Medical Center ran a deficit of $141.9 million in 2023, $22 million less than in 2022 but still the second-largest in its history, according to an outside audit of the hospital system's finances.

For the sixth year in a row, the accounting firm that conducted the audit also expressed “substantial doubt” the system could continue as a “going concern.”

Nassau Health Care Corp., or NuHealth, logged the large operating deficit last year even as it implemented revenue-generating initiatives  and benefited from an influx of federal funding, the audit shows. NuHealth is a state public benefit corporation that runs NUMC in East Meadow, the county’s only public hospital, and the A. Holly Patterson Extended Care Facility in Uniondale, Nassau’s sole public nursing home.

Auditors have issued the “going concern” warning since 2018, when the deficit was $46.6 million. The budget gap reached $64 million in 2019, $102.3 million in 2020, $135.6 million in 2021, and $164.1 million in 2022. Accountants issue the "going concern" warning when a corporation is unlikely to survive beyond a year.

The audit by Grant Thornton, a Manhattan accounting firm hired by NuHealth, provides an independent accounting of the health system’s finances at a time of fiscal uncertainty. 

In February, an outside consultant warned NUMC's cash levels were dangerously low.

Richard Kessel, chairman of the Nassau Interim Finance Authority, which controls Nassau County and hospital finances, said the audit shows a health system in deep distress.

“I wouldn’t pat myself over the back over a $140 million-plus loss. I would strive to have no loss," Kessel told Newsday on Thursday. “I don’t think they're even close to doing that.

“Even if you take that number, it’s a huge loss. That kind of a loss every year and growing is not sustainable,” Kessel added.

Megan Ryan, interim president and CEO, declined to be interviewed.

She said in a statement to Newsday: "This is a process that is addressing longstanding chronic challenges, but it has realized significant success already, despite cuts in state aid. Our fiscal reform plan has already reduced the projected deficit by more than $100 million through a variety of resource management reforms under the control of the corporation, tripled our cash on hand and increased our collections to a degree that should reassure the public that NUMC can survive and thrive."

Ryan continued, "We’re continuing our cost savings and revenue generating initiatives, but ultimately as a safety net hospital we will always need to rely on some subsidies to ensure quality health care for all — including those who are unable to pay."

Difficult economics

The economics of running NUMC, which primarily treats low-income patients on Medicaid or without insurance, have become increasingly difficult.

In 2020, the federal government ended the Delivery System Reform Incentive Payment program, which provided $8 billion to New York over six years, including tens of millions of dollars annually to NuHealth. 

In 2014, Nassau County, which guarantees about $100 million in health system debt, ended a subsidy to NuHealth of $12 million per year.

Overall, NuHealth generated $536.8 million in net patient revenue in 2023, $76.2 million more than in 2022, according to the new audit.

NuHealth said it has implemented programs to raise new revenue, such as hiking the cost of hospital procedures for the first  time in a decade.

The system also received $49.4 million more in Medicaid-related payments in 2023 than in 2022, auditors reported.

But NuHealth had higher expenses than in 2022 due to wage increases and overtime payments to nurses to cover a labor shortage, along with other costs. NuHealth paid $318.3 million in employee salaries in 2023, compared with $312.5 million in 2022, auditors said.

State aid battle

NuHealth is applying for $83 million in emergency state aid.

In March, state Health Commissioner James McDonald said NuHealth had to cut deficits and search for a permanent president and CEO to get the funding. NuHealth submitted recovery plans with the state later that month, but McDonald called them “insufficient.”

NuHealth leaders submitted new letters in May, arguing they were struggling to attract a permanent CEO amid news reports about the system’s financial troubles.

Dr. Vikas Saini, president and chief executive of the Lown Institute in Massachusetts, a health care think tank, said it was too soon to tell whether NuHealth finances were trending in the right direction.

"Numbers of that size, $160 million or $140 million, are really not sustainable, and that's a serious matter," Saini told Newsday on Thursday.

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.