Nassau University Medical Center operator's deficit spikes

NuHealth, the public benefit corporation that runs Nassau University Medical Center, ran a $63.97 million budget gap last year that stood as a significant increase from totals of $46.6 million in 2018 and $25.7 million in 2017, according to new audited financial statements.

The outlook for the health system that operates NUMC, Nassau County's only public hospital, is even more troubled this year, as the 2020 budget forecast an operating deficit of $86.1 million, before the coronavirus pandemic put further strain on the institution's finances.

The health system’s worsening fiscal picture was documented in the financial statements, which are required under state law and published annually. Auditors for the second year in a row issued a “going concern” note that expressed substantial doubt about NuHealth’s ability to continue operating. 

Robert Detor, chairman of NuHealth since Jan. 17, said the note from independent auditor Mitchell Titus, a Manhattan accounting firm, “reflects the potential that the institution wouldn't survive.”

He continued, “We’re looking at … not a good spiral here.”

Detor has said NuHealth is on course to run out of cash by the end of March and is in dire need of outside funding. NuHealth also operates the A. Holly Patterson Extended Care Facility in Uniondale, and family health centers.

Detor, a longtime health care executive, said he was concerned about how to cover the "$80-plus million loss. I don't know where the source is going to come to pay for that, quite frankly." 

Richard Rank, NUMC's finance director, said the large deficit also is due to the fact that "we treat the indigent and we treat primarily Medicaid patients, here."

Officials are expecting to receive millions of dollars less in state and federal aid this year, due to the winding down of a program that rewards hospitals for reducing hospitalizations.

Last year, the hospital also received about $10 million less in state intergovernmental transfer payments, or IGTs, than in 2018, according to the financial statements. Total net patient service revenue was down by $14.1 million from 2018. NuHealth had a $575 million operating budget in 2019.

Last year, hospital administrators agreed to raises for 3,000 union workers that added $3 million in unbudgeted expenses for 2018 and are expected to cost between $7 million and $8 million this year.

The hospital cared for a surge in coronavirus patients in March and April. But admissions declined as the pandemic subsided, and NUMC's average daily patient count is down to 270, compared with the 340 the health system had expected when preparing the 2020 budget.

The drop-off is expected to result in a $4 million to $6 million loss in 2020, officials said.

Detor said he has been in talks with the state about the possibility of new subsidies.

NUMC is working with Alvarez & Marsal, a financial consultant that is reviewing hospital operations. The board of the Nassau Interim Finance Authority, a state board that took over NuHealth finances in February and also controls Nassau County finances, voted in May to hire the consultants.

Also, officials are examining “ways we can generate efficiencies in our current operations,” such as providing more ambulatory care outside the hospital, Detor said. 

"It's got to be financially sustainable, and it can’t levy a tremendous cost to the taxpayer if there's another option," Detor said of the hospital.

According to the new audited financial statements, NuHealth “has suffered recurring losses from operations, a working capital deficit, and a total negative net position, and has stated that substantial doubt exists about its ability to continue as a going concern.”

Auditors said NuHealth “is dependent on the continuation of federal, state and local subsidies, certain of which are scheduled to end or be reduced. These matters raise substantial doubt about [NuHealth’s] ability to continue as a going concern.”

Auditors said the COVID-19 health crisis “has added further uncertainty regarding the operations of [NuHealth], as well as the health care system in general.”

NIFA chairman Adam Barsky said the control board is "in the midst of analyzing the hospital."

NUMC is "on a trajectory to run out of money sometime in the near future. The financial picture has not gotten better at all.”

Barsky continued: “There’s probably more stress there than there was before, just because of what’s going on in the economy, the COVID, and the costs involved with that. The cost of the labor deal, and just the stress on the system has not gotten any better. It continues to be in a difficult position.”

Nassau County Executive Laura Curran called the hospital's fiscal condition “very concerning."

Nassau County backs $173 million in hospital debt, and its obligations are "independent of [NuHealth's] ability to remain a going concern," according to the county's 2019 financial report.

Curran argued that NIFA's consultants need to be allowed to "do their job. The whole exercise is to identify savings, so that we can continue to provide care, so that this hospital can survive and thrive."

She suggested NUMC could be useful in the event of another surge of COVID-19 cases, should more bed spaces be needed.

However, she noted the patient “census is down, from people getting other kinds of care."

And "like we’ve seen in all industries, in transit, retail and food … COVID is really shifting everything, so it’s natural to see how adjustments are going to be made in health care, how health care is provided," Curran said.

She said she was focused on ways to preserve Nassau's only "safety net" public hospital.

"How does it survive?" Curran asked. "What does it look like as we get out of this pandemic?"

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.