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Department of Health says Massena Memorial moving in right direction with privatization study

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MASSENA — State Department of Health officials say Massena Memorial Hospital is moving in the right direction with its study on possible privatization, according to hospital Chief Executive Officer Charles F. Fahd II.

Mr. Fahd said he, along with the hospital board of managers chairman, vice chairman and attorney, recently visited with Health Department officials in Albany. Among their discussions with Health Commissioner Dr. Nirav R. Shah was the hospital’s ongoing study to determine the feasibility of switching from a municipal facility to a nonprofit organization.

“They really can’t get terribly involved in the process until such time as a decision is made by the hospital board and the town board to move forward with the process. No decision has been made to do that,” Mr. Fahd said.

One of the concerns from the Department of Health, he said, was financial viability of area hospitals. “They do have some concerns about the number of days’ cash on hand,” Mr. Fahd said.

Massena Memorial Hospital began studying possible privatization this year because of cost concerns, as well as its inability to share services with other hospitals because of its municipal status.

Hospital officials agreed in July to hire the law firm of Hancock Estabrook LLP, Syracuse, at a cost not to exceed $100,000 for the study. Board members retained the firm in August to explore transitioning to a private, nonprofit facility.

That study consist of three phases. The first will study all contracts, such as vendors and employees, to see if anything would prohibit a change in status. Phase two is implementation.

Following Town Council approval, the hospital could start filing the paperwork such as a certificate of need to begin the conversion process. The third phase is to acquire tax-exempt status from the Internal Revenue Service.

More recently, board members agreed to enter a contract with Freed Maxick Healthcare, financial analysis consultants, at a cost of up to $32,000 to do a financial study for the hospital. The consultants will look at the hospital’s audited financial statements as well as the employee benefit plans in place, Mr. Fahd said.

Discussing the financial hurdles facing the hospital, Mr. Fahd has said that what was a $124,200 contribution to the state’s pension program in 2002 has jumped to $4.4 million this month, with a projected $4.8 million contribution in December 2014.

He also has said that among the projected losses over the next 10 years are a reduction of $10.5 million in Medicare reimbursement because of the federal Affordable Care Act, a $1.9 million reduction in Medicaid reimbursement because of sequestration and a $2.7 million reduction in Medicaid reimbursement because of inpatient coding adjustments.

Mr. Fahd also has said that the state Health Department wants north country hospitals to seek formal affiliations, collaboration, merger or other sharing agreements to reduce duplicated services such as capital equipment acquisition and overall health care expenses.

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