Funding cuts from the state of New York are expected to sock publicly funded hospitals, particularly SUNY Downstate Medical Center, which has less than five months before it could face insolvency.
The 360-bed facility in the New York City borough of Brooklyn is already working under a plan to reduce its workforce, cut costs, restructure its debt and maximize revenue. SUNY Downstate is also attempting to shutter 337-bed Long Island College Hospital, also in Brooklyn, which was pegged in a state audit as a “major cause” of its “fiscal stress.”
A judge last month barred SUNY Downstate from going ahead with its plans to close LICH
, which it acquired in May 2011.
In the meantime, SUNY Downstate's woes continue. In a March 5 filing to bondholders (PDF)
, the state's Budget Division reported that funding for State University of New York hospitals that was added in the fiscal 2013 budget will be discontinued.
The cuts eliminate $29.8 million for the state's three academic medical centers.
In testimony last month before New York state legislators, SUNY Chancellor Nancy Zimpher said the funding cuts would exacerbate an already “precarious” situation.
She noted that SUNY Downstate would require at least another $99 million in state aid, up to as much as $150 million, and SUNY Upstate Medical University, Syracuse, would need an additional $35 million to help “stabilize” its situation and avoid the same financial crisis.
Bob Bellafiore, a spokesman for SUNY Downstate, said President Dr. John Williams has a 35-page improvement plan for the hospital that includes revenue cycle enhancements, a new leadership team, staff reductions, moving forward with closing LICH and changes to physician compensation such as setting productivity standards. Yet he added that the hospital is still on “choppy waters” unless the state increases funding.
Unions have also been lobbying the state
to bail out SUNY Downstate in a scene reminiscent of the attempt to save St. Vincent's Hospital
, which closed in 2010 in New York City's Greenwich Village neighborhood.
Bellafiore noted that 70% of Downstate's patient population is on public assistance and many patients rely on acute-care instead of forming relationships with a primary-care physician. In addition, Downstate faces the same problem of excess capacity as other Brooklyn hospitals.
Nevertheless, he said, the hospital is vital to serving an area with a large number of immigrants, many illegal, and to educating future doctors. “Downstate has a unique mission,” he said. “It's attached to the only medical school in Brooklyn.”
The state audit, released in January, found that SUNY Downstate faces a cash shortfall of about $3 million each week and concluded that the hospital will run out of cash by July.
In a response to the state, Williams agreed with most of the audit's findings, but noted that the July estimate does not take into account its efforts to continue to cut costs and increase revenue.
The hospital has been working with consultant Pitts Management Associates on a number of operational initiatives.
Williams also blamed a “precipitous decline in state support” for the “rapid” deterioration of SUNY Downstate's financial position, as well as state-negotiated collective bargaining agreements that mandated salary and retirement plan increases and prevented layoffs—limiting its ability to control its labor costs, which represent 70% of its cost base.