Massena Memorial board hires law firm to explore converting hospital into a private, non-profit facility
Tuesday, July 23, 2013 - 5:28 pm

By ANDY GARDNER

MASSENA -- Massena Memorial Hospital’s Board of Managers unanimously decided Monday to hire the law firm Hancock Estabrook, LLP at a cost not to exceed $100,000 to look into transitioning from a municipal entity to private non-profit.

Board member Darrell Paquin said the firm will conduct a three-phase study. Phase one will include looking at all contracts, including those that cover employees and vendors, to see if any prevent the hospital from changing status.

The second phase, or implementation phase, would require town board approval, Paquin said, and would mostly consist of filing paperwork. The final phase would be getting tax-exempt status.

Hospital CEO Charles Fahd said the first phase could take up to three months, the second up to two months, and the third up to six months.

Members of the board’s executive committee said the firm was one of two they looked at and both recommended hiring an independent financial consultant to conduct a feasibility study to look at costs associated with the potential transition.

“I envision this feasibility study showing … what’s a five-year projection going to look like” if the hospital were to get non-profit status, Paquin said.

Fahd has previously stated that the decision to look into privatization comes on the heels of mounting costs and dwindling insurance reimbursements. The hospital is looking at a $15 million loss in reimbursements and is under a directive from the state health commissioner to look at the potential of merging or collaborating with other facilities. Its options for this are limited as a municipal hospital.

The projected losses include $10.5 million reduction in Medicare reimbursements stemming from the Affordable Care Act, $1.9 million in cuts from Medicaid reimbursements as a result of the federal sequester, and a $2.7 million reduction because of in-patient coding adjustments, which determines how much a facility is reimbursed for treating a patient.

Retirement contributions have risen exponentially over the last decade and they are expected to keep going up, officials said. The hospital must pay $4.4 million into the state retirement system by December 1, compared to a $124,200 contribution in 2002. That is expected to go up to $4.8 million in December 2014.

The decision to look at privatization has come under fire from hospital employees and the Massena community and several representatives of an MMH community coalition were on-hand at the meeting to question the hospital board.

Shaylyn Frederick asked the board if there were any options other than privatization.

“There is one other viable option, and I don’t think it’s an acceptable one, tax the property owners in the community,” Fahd said, later adding that the town board could choose to sell the hospital with the stipulation that the buyer make it a non-profit entity.

Annie Rutsky, a labor relations official for MMH nurses voiced concerns as to what would happen to New York State Employee Retirement System (NYSERS) pensions if the hospital privatized.

“If you are not a public entity, you are not eligible to be part of the pensions system,” board chairman Andrew Spanburgh said, later adding that the board is “trying to get a sit-down” with NYSERS officials to discuss the issue.

At the close of the meeting, Massena Town Supervisor Joseph Gray urged the board and the community to tread lightly when handling the issue. He said “everyone needs to dial back the emotion and rhetoric when it comes to this issue.”

He told the board of managers to emphasize that no decisions have been made and when and if the time comes, have “open and public discussion of all options.”

Additionally, he said the community needs to be assured that the hospital won’t be closed or sold and if privatization happens, it “will still be a local entity controlled by a board of local people whose only interest is to ensure that MMH remains viable for many years to come in order to provide quality health care for the Greater Massena community.”