Financial consultants recommend Massena Memorial Hospital become a non-profit
By ANDY GARDNER
MASSENA -- An independent firm hired by Massena Memorial Hospital told the Board of Managers on Monday night that the institution will eventually go broke if it remains a town entity and doesn’t make significant cuts or collect extra income through higher property taxes.
“In 2017, the institution will run out of cash,” Chris Eckhardt of FreedMaxick CPAs told the board.MMH Chief Executive Officer Charles Fahd said they would have to slash “$4 million annually moving forward,” including “a massive loss of jobs from the hospital.”
“It would require the town of Massena to fund the deficit through the tax rolls at an approximate tax levy of $3.2 million per year,” a statement from FreedMaxick reads.
“I don’t think that’s a viable option,” Fahd told the board when talking about the potential of town taxes supporting MMH.
On the other hand, Eckhardt told the board if the institution can privatize, they will be able to keep themselves afloat. According to FreedMaxick’s statement, MMH is projected to end 2014 with a $1,312,000 net loss from operations and $4,538,000 cash on-hand under either scenario, public or private.
Between 2015 and 2018, the CPA firm projects the hospital will have cumulatively lost $10,598,000 as a public entity but will see a cumulative net gain of $4,098,000 if it goes private. In the date Eckhardt quoted of 2017, he believes they will have a negative balance of cash on hand to the tune of $3,200,000 compared to a $7,400,000 surplus if they go not-for-profit.
“It is clear MMH should move forward with the not-for-profit scenario especially when considering the cash position of MMH,” the FreedMaxick statement reads.
Hospital officials are looking at the potential transition for a myriad of reasons, including shrinking reimbursements and directives from the state Department of Health to look at regional collaborations and partnerships. They believe there are too many facilities for the North Country’s population, Town Supervisor Joseph Gray said at a Town Council meeting in November.
The hospital saw an overall $3,310,000 net loss from operations in 2013 and ended the year with $4,986,000 cash on-hand – a $1,855,000 reduction from the previous year. They are projecting a $1,312,000 loss for 2014.
For the month of January, they reported a $37,325 net gain, compared to a $389,415 net loss for January 2013. MMH Chief Financial Officer James Smith said the gain is due to new Ob-Gyn services and the MMH Outpatient Center, formerly Seaway Orthopedics Physical Therapy.