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Massena Memorial Hospital moving ahead with privatization

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MASSENA — The Massena Memorial Hospital board of managers is moving forward with plans to turn the facility into a private, nonprofit hospital.

Following an executive session this week, board members agreed by a 9-0-1 vote to send their recommendation for privatization to the town council, which will have the ultimate say in the hospital’s status.

Board member Loretta B. Perez abstained from the vote, and board members David M. MacLennan and Edward J. Fay were absent.

“Now it’s in the hands of the town board for their decision,” hospital spokeswoman Tina R. Corcoran said.

Representatives from Freed Maxick Healthcare, consultants hired by the hospital board of managers to study privatization, said last month that the hospital would be bankrupt by 2017 if it maintained the status quo.

In 2017, the hospital would be $3.2 million in the red, with $53 million in operating revenue but $56.2 million in operating expenses, with a net income loss of $3 million.

In 2018, the hospital would be $7.8 million in the red. Operating revenue would be $54 million and operating expenses would be $57.9 million, with a net loss in income of $3.8 million.

Town officials have said that should the hospital end up bankrupt, the financial burden might fall on the taxpayers.

“People don’t want an additional thing added to their homeowner’s tax,” Mrs. Corcoran said.

On the other hand, certified public accountant Alan Gracie told hospital board members in February the hospital would have a small operations loss in 2018, but would have $6.6 million in cash and equivalents on hand if it changed its status to a nonprofit organization. They estimated operating revenue of $53.9 million and operating expenses of $54 million, for a net income loss of $27,000.

The report provided by the Freed Maxick representatives was in draft stage in February, but Mrs. Corcoran said the board is expecting the final report in the next few days.

“We’ll probably have it on our website by Monday if people want to review it,” she said.

The hospital’s website is www.massenahospital.org.

She said if the town board elects to move forward with privatization, hospital users will see no difference in their health care.

Town Supervisor Joseph D. Gray said he was notified Tuesday that the board of managers had voted to move forward with the privatization.

“Nothing can happen until the town board says yes or no. Certainly there are some members of the town board who still have questions. I think they’ve been doing a lot of research and trying to get the information they need,” Mr. Gray said.

He said that although changes at the hospital could save some money, it wouldn’t stave off the reported debt the hospital would face in the years ahead.

Mr. Gray attributed a large part of the hospital’s financial situation to rising pension costs. Mr. Fahd previously had said that what was a $124,200 contribution to the state’s pension program in 2002 jumped to $4.4 million by December 2013, with a projected $4.8 million contribution this year.

“I have not seen any evidence of savings that can erase the impact of the pension payment,” Mr. Gray said.

But Civil Service Employees Association spokesman Mark M. Kotzin said while pension costs had been an issue, they are likely to be less of a financial burden in the future.

“I know a lot of the assumptions are that future costs for the hospital involve the pension going up. Pension costs are now going down. The state comptroller’s office released projections that they were going down,” Mr. Kotzin said. “When the economy tanked in 2008, contribution levels were still rather low. They had to raise them exponentially to make up for the loss of the market.”

Now, he said, the market has recovered and health care reforms have produced some savings.

“The end result is 2014 and 2015 are really the last years that the comptroller projected any increases. Following that, they’re projecting decreases to pension costs,” Mr. Kotzin said.

He said rising health care costs also are less of an issue for employers with the introduction of the Affordable Care Act, and that the union has made suggestions to lower the cost of health insurance.

“We can make changes to save the hospital plenty of money and perhaps enable it to remain owned and operated by the public,” he said.

Mr. Gray said town board members will review the consultant’s report to see what the tax impact would have been if the town had to absorb the hospital’s last three years of deficits, information it would want to share with residents.

“The short answer is I don’t think anybody thinks the hospital can stay public long term. The hospital board obviously wants to move things along as quickly as possible. The town board needs to think about the best course of action and time frame,” Mr. Gray said.

Mr. Kotzin suggested that the full report by Freed Maxick be examined thoroughly before any decisions are made.

“The bottom line from our perspective is that they were making a decision based on the consultant’s report. That report, to the best of my knowledge, was never made public. We had asked for a copy of that report. We were told it was only in draft format and we would get it when it was finalized,” he said.

He said the public deserves to see what’s in the report. He also questioned the accuracy of the numbers in the report, which he said CSEA plans to examine once it obtains a copy.

“Ultimately the decision seems irresponsible that the hospital board would go ahead and make a determination without all of the information being made public. I hope town officials are really looking at all options, not just going to a private operation and giving up control,” he said.

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