NUMC turnaround plan 'insufficient,' state health chief says

State Health Commissioner James McDonald on Thursday called Nassau University Medical Center's fiscal turnaround plan “insufficient,” dealing a blow to the public hospital system as it seeks $83 million in emergency state aid.

McDonald was reacting to a plan submitted on March 25 by NuHealth, the public benefit corporation that runs NUMC, to cut deficits by appealing insurance denials, restricting overtime and hiking the price of hospital services for the first time in more than a decade.

McDonald had demanded in a letter March 1 that the hospital immediately begin a public and professional search for a new president and CEO, and produce a plan to cut deficits, in order to qualify for the emergency funding.

In a letter Thursday to NuHealth chairman Matthew Bruderman and Megan Ryan, NuHealth interim president and CEO and general counsel, McDonald said NuHealth's filing was “insufficient and lacks a detailed 5-year transformation plan.”

In his letter McDonald also said NuHealth “has not committed” to a CEO search. The letter was released by the office of Gov. Kathy Hochul, a Democrat.

NuHealth officials have 30 days to satisfy the department's demands, McDonald wrote.

Richard Kessel, chairman of the Nassau Interim Finance Authority, the state board that controls hospital and Nassau County finances, said NuHealth has a “ways to go” to satisfy the state.

“The hospital has made some progress and has complied with some of the health department’s demands, but it hasn’t satisfied many of those demands,” Kessel told Newsday.

“I think it’s imperative that the hospital just comes out and says we’re going to comply with whatever our regulator, the health department, says we need to do,” Kessel said.

“From my perspective, if they're not in full compliance with the health department's demands, they're not likely to get any further state funding,” he said.

Ryan declined to comment on Friday. Bruderman did not respond Friday to requests for comment for this story.

Gordon Tepper, a spokesman for the governor's office, said the health department "has identified a number of outstanding items, and we look forward to NUMC leadership addressing those issues in the allotted 30 days."

Finances

NuHealth is on the verge of running out of cash, consultants hired by NIFA have warned. Because NUMC treats a large number of low-income patients who are uninsured or on Medicaid, the hospital long has struggled with operating deficits.

NuHealth had 30 days' cash on hand as of Thursday, enough for 18 days of operations, Kessel said.

In their March 25 letter to McDonald, Bruderman and Ryan vowed to slash deficits by cutting expenses and generating new revenues.

Bruderman and Ryan offered a five-year spending plan they said would cut deficits to between $18 and 67 million by 2027, compared with an estimated shortfall of $78.2 million to $121 million for 2024. 

McDonald said their plan falls short. It should include monthly progress reports, as well as detailed financial statements that show balance sheets, income statements and cash flow reports for each of the next five years, McDonald wrote Thursday.

Also, McDonald wrote, the hospital submitted an organizational chart that was “not legible.” In an attachment to Bruderman's and Ryan's March 25 letter employee names that were blurry and in small print. 

CEO search

In their response to McDonald on March 25, NuHealth officials included minutes of a meeting in January at which hospital board members approved a search for a permanent leader after appointing Ryan to replace former CEO and president Dr. Anthony Boutin on an interim basis.

But McDonald said there was no evidence the hospital had launched a search for Boutin's replacement.

In its submission to the state, NuHealth had attached a Feb. 27 email from Korn Ferry, an executive search firm. A Korn Ferry employee recommended “focusing on internal organizational review rather than initiating a comprehensive search,” according to the email. The firm also suggested “an evaluation of the current interim CEO.”

McDonald said the department “expects a commitment to a comprehensive external search and a documented and detailed plan for executing the search.”

State aid

McDonald accused NuHealth officials of misrepresenting state aid distributions and ordered them to resubmit a chart entitled “NYS Funding Reductions.” The hospital is wrongly representing one-time subsidies as recurring revenue, he wrote.

NuHealth officials and Republican Nassau County legislators have accused the state of cutting funding to NuHealth, starving it of necessary funds.

But McDonald wrote Thursday that the hospital system benefited from state funding sources such as the Delivery System Reform Incentive Payment that were “either temporary or one-time.”

DSRIP was a state program that allowed New York to funnel $8 billion in federal Medicaid savings to local hospitals. DSRIP, which was not a permanent program, ended in March 2020.

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler is a deputy editor for the towns department at Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.