A New York appeals court said last week that New York City cannot privatize its public hospitals without a change in state law.
A four-judge panel of the state Supreme Court said New York City Health and Hospitals Corp., which runs the city's system of 11 acute-care hospitals, overstepped its statutory authority by attempting to lease Coney Island Hospital to a private, for-profit company without approval by the state Legislature.
The panel, which upheld a lower-court decision, said such state approval is necessary. Its decision vindicates the New York City Council, which sued Mayor Rudolph Giuliani over the proposed 99-year lease of 488-bed Coney Island Hospital to Wayne, Pa.-based Primary Health Systems.
HHC's board of directors approved a sublease of Coney Island last November. Before Primary Health can take control of the hospital, pending litigation needs to be resolved. The company also needs state certificate-of-need approval.
The City Council maintained that the mayor and board of HHC can't lease away public hospitals without the council's approval. The court agreed, saying any sublease of an HHC facility requires the City Council's blessing. Council Speaker Peter F. Vallone called the decision "a great victory" for New Yorkers.
The city plans to appeal the decision.
According to the appeals panel, HHC lacks authority under its state charter to lease hospitals to private operators. But HHC and Primary Health remain committed to the deal.
"Primarily, we feel that we need the flexibility in a changing healthcare market and in a time where there's such tremendous competition for patients," said Jane Zimmerman, an HHC spokeswoman. Privatization is a creative option that allows HHC to be responsive to patients, she said.
Ethan Geto, a spokesman for Primary Health, said the company is hopeful that the state appeals court will hear the case.