Hospitals crying poverty is nothing new in New York, and a financial analysis released last week confirmed just that, finding almost no change in the troubled finances of many New York hospitals from 1999 to 2001.
The report by the United Hospital Fund, a New York-based not-for-profit health services and research organization, found that in 2001, the most recent year for which data were available, 13 of the city's 35 hospitals were considered "in jeopardy"-suffering from large and recurring operating losses and working capital and net asset deficits. The same 13 most severely distressed hospitals also were at risk in 1999 when the organization published its last analysis. The report noted that these hospitals typically have fewer than 300 occupied beds and treat a disproportionate share of low-income patients.
"(The study) maybe picked up a lot more steam than I would have anticipated, and some of the hospitals were not happy with being singled out through the media," said Kenneth Raske, president of the Greater New York Hospital Association. "Some of the media reports inaccurately said some institutions were in trouble when in fact they are doing a turnaround."
In the aggregate, New York hospitals posted an operating margin of -0.4% in 2001 based on $15.5 billion in revenue. Hospitals classified as "in jeopardy" together posted an operating margin of -4.7%. Another seven hospitals identified as "at risk"-able to meet their financial commitments but vulnerable to changes such as declines in reimbursements or increases in the number of uninsured patients they treat-in the aggregate operated with a margin of 0.5%. Meanwhile, the 15 healthiest hospitals included in the study posted an aggregate operating margin of 0.9%. New York's most financially stable hospitals boasted higher occupancy rates and a growth in inpatient utilization compared with their national peers, but they had lower surpluses, which affects their ability to increase debt or fund new projects, according to the study.
The national average operating margin for large urban hospitals is 1.8%, according to the study, which based its analysis on the audited financial statements of New York hospitals, as well as almanacs by healthcare information companies Solucient and Ingenix.
"There's really nothing new here. A number of institutions are chronically underfunded," Raske said. "But I think what it does is continue to highlight the fiscal distress of institutions for the general public."
Though the United Hospital Fund, which said it is only interested in tracking trends, closely guarded the identities of the 13 hospitals in jeopardy, some media reports expanded on the study's results by noting hospitals outside the city but in the region that are closing. Among them is 213-bed Island Medical Center in Hempstead, Long Island, which did not fall within the five-borough purview of the report. The hospital filed for bankruptcy protection in October 2000-the second time in less than a decade-and in July finally threw in the cards after running out of cash, said Fred Hyde, a consultant hired by Local 1199 of the Service Employees International Union who had been working to save the hospital. Hospital officials said that in 2002, the hospital lost $12 million in operations on $22 million in net revenue-a -55% operating margin (March 3, p. 38).
Another distressed hospital scheduled to close as early as 2004 is the Staten Island campus of Bayley Seton, part of eight-hospital St. Vincent Catholic Medical Centers. The former public hospital is merely "relocating" most services and staff two miles away to St. Vincent's Hospital Staten Island, said Bernadette Kingham-Bez, a St. Vincent's spokeswoman. The Bayley Seton division, which since 1999 has devoted its inpatient beds to psychiatric, substance abuse and neurobehavioral health patients, was projected to lose $13 million on revenue of $72 million this year, she said.
"So it's not a closure of services but the closing of a 72-year-old public health facility that requires over $30 million in capital investment," Kingham-Bez said. She also noted that at the same time the system is closing Bayley Seton, it is picking up 186-bed St. Clare's Hospital and Health Center in Manhattan (July 7, p. 18).
Two other hospitals within New York's five boroughs have closed divisions. The 653-bed Brooklyn Hospital Center last January closed inpatient beds at its Caledonian campus, leaving outpatient clinics and an urgent-care center as the only services at the site. The 694-bed Staten Island University Hospital last spring took out the outpatient beds at its Concord campus and is hoping to get state approval to transfer them to another of its two remaining divisions, said Arleen Ryback, a hospital spokeswoman. Like Bayley Seton, the Concord division requires costly renovations, she said.