Auditors: NuHealth has a deficit of $ 102.3 million in 2020
The utility company that runs the University of Nassau Medical Center had a budget deficit of $ 102.3 million in 2020 – a 60% increase from 2019 – prompting external auditors to warn that the only public hospital in Nassau County may not survive, according to a new report obtained by Newsday.
For the third year in a row, the annual audit of the hospital’s finances said there was “substantial doubt” that the hospital could continue to exist given the deteriorating finances.
NuHealth “has experienced recurring operating losses, a shortfall in working capital (…) and is dependent on continued federal, state and local grants, some of which have or are scheduled to end or be reduced,” said said auditors at Mitchell Titus, an accounting firm in Manhattan.
The issues raise “significant doubt as to NHCC’s ability to continue operating,” a term auditors use to warn that an entity may not survive.
What there is to know
NuSanté, which operates Nassau University Medical Center in East Meadow, had a budget deficit of $ 102.3 million in 2020 – 17% of its operating budget – according to independent external auditors.
The shortfall continued a growing deficit model for NuHealth, a public utility that posted deficits of $ 25.7 million in 2017, $ 46.6 million in 2018 and $ 63.97 million in 2019.
The annual report of the statutory auditors was the third in three years to express significant concern about the viability of Nassau County’s only public hospital.
Adam Barsky, chairman of the Nassau Interim Finance Authority, a state council that controls the finances of NuHealth and Nassau County, said NuHealth’s tax problems have “worsened”.
The company continues “to run a billion dollar equity deficit, which means it is essentially insolvent, and the external auditors have again issued the” going concern “notice,” he said. Barsky said in an interview with Newsday.
“Everything is not moving in the right direction,” he said. “There is no recurring income to cover recurring expenses. They will continue to draw on their cash until they run out of cash and they will have to shut down.”
The release of the 2020 financial report, a requirement for state-owned public utility companies, comes a month after former NuHealth chairman Robert Detor resigned from the board.
Detor, who was appointed by Nassau County manager Laura Curran in January 2020, said the rest of NuHealth’s board of directors failed to pass key reforms to put the company’s finances in order.
NuHealth chairman Edward Farbenblum, whom Curran appointed in May, said Mitchell Titus’ listeners had come to a “valid conclusion.”
“We have a lot of hard work to do,” said Farbenblum, a business owner and operator of 18 nursing homes who took over as chairman of the board after Detor resigned.
Farbenblum said it plans to release a “robust” three to five year plan to improve hospital operations within three months containing “granular performance budgets.”
He continued, “There are no sacred cows, we will be looking at everything.”
Mitchell Titus expressed concern about budget deficits and indebtedness at NuHealth, also known as Nassau Health Care Corp., or NHCC.
$ 594.5 million The total budget for 2020. $ 917.1 million Total liabilities for 2020
The 2020 budget gap was part of a continuing trend, the report showed. Past annual audits have shown budget deficits of $ 25.7 million in 2017, $ 46.6 million in 2018 and $ 63.97 in 2019.
In 2020, NuHealth’s operating loss was equivalent to 17% of the company’s annual budget of $ 594.5 million, according to the auditors’ report.
The A. Holly Patterson Nursing Home in Uniondale, which NuHealth also operates, reported an operating loss of $ 32.8 million in 2020, up 37% from 2019.
NuHealth’s liabilities, including payments to thousands of retirees, grew to $ 917.1 million last year, from $ 810.7 million for 2019.
The concerns voiced by Mitchell Titus’ auditors echoed those of consultants hired by NIFA.
Consultants, Alvarez & Marsal, of Manhattan, reported in March that NuHealth could not survive without taking drastic measures, including closing the NUMC emergency room, reducing hospital staff from 3,400 to around 300, and sale of the A. Holly Patterson retirement home.
Health care experts say it is not uncommon for public hospitals to run operating deficits, especially in communities where many patients do not have private insurance plans that reimburse health care providers. health care at higher rates than Medicaid or Medicare.
The share of NUMC patients on Medicaid increased from 14% to 24% between 2019 and 2020, auditors said.
The number of Medicare patients has increased from 10% to 16%.
The proportion of patients with commercial insurance increased from 19% to 10% from 2019 to 2020.
In a June written response to the NIFA consultants report, Dr Anthony Boutin, CEO and President of NuHealth, said that Alvarez & Marsal “focused strictly on financial sustainability. Unfortunately, these recommendations did not consider that our mission is to provide treatment to underserved people, regardless of their ability to pay. “
Boutin also mentioned the decline in state aid to hospitals.
“It is important to stress that some of the challenges we are currently facing are unfortunately beyond our control,” Boutin wrote.
NuHealth has received between $ 170 million and $ 190 million a year in state aid in recent years, but is only expecting around $ 88 million this year, according to a chart Boutin provided to NIFA.
One of the main reasons for the decline in state aid was the federal government’s refusal last year of New York’s request to extend the Incentive Payment program to delivery system reform, the program state Medicaid reform, officials said.
The state had asked for an additional $ 8 billion over four years.
DSRIP had provided NuHealth between $ 30 million and $ 50 million per year since 2017, according to data provided by Boutin to NIFA.
Richard Rank, chief financial officer of NuHealth, also said that a deficit of $ 33 million in the pension fund, recorded in March 2020, contributed to the 2020 budget deficit.
Rank blamed the pension fund deficit on the stock market collapse triggered by the coronavirus pandemic. He said he expects the fund balance to improve this year, given more favorable market conditions.
Barsky said financial reports and audits “don’t take into account the needs of the community – it’s a bit absurd because if you run out of money, you run out of money.”
Barsky continued, “What we’re trying to say is that you should come up with a plan in which the income received matches or exceeds the income spent, so that they don’t run out of money and don’t have to shut down. . “
NuHealth officials, he said, “haven’t made any plans to avoid running out of money, and this has been identified by auditors, not us.”
In his letter to NIFA officials, Boutin conceded that NuHealth “currently does not have a formal plan to address the uncertainty of our continuity.”
However, Boutin identified several new efforts to increase NUMC’s revenue.
Officials are contacting surgeons with the aim of increasing the volume of patients in operating rooms, Boutin said.
In addition, the hospital has launched “public relations and marketing efforts” to “improve the volume of patient services and raise awareness of all of our available services,” Boutin said.
Boutin said the hospital is on budget for 2021.
“We are hitting all the metrics that we said we were going to achieve, and we are going in the right direction, but we still have a lot of hard work to do,” Boutin said.
In a statement to Newsday, Curran said “the audited financial statements present a difficult picture and challenge for NHCC.”
Curran continued, “Across the country, backstop hospitals are in dire straits. We are closely monitoring the Biden administration’s human infrastructure bill for much needed funding for these hospitals, which provide such a vital service to people. communities in need. “
State Senator Kevin Thomas (D-Levittown), whose district includes NUMC, said the Mitchell Titus audit affirmed “what we already know about NUMC.”
Thomas explained: “What needs to be done next is what everyone should be focusing on because we can’t have a public hospital like this that closes its emergency room, closes floors – we must be able to turn this society around as quickly as possible. “
“They’re hanging by a thread here, and we have to see some dramatic action unfold,” Thomas said.