Biggest Issues: Costs of State Pensions & Municipal Status
Massena Memorial Hospital expects to file bankruptcy and close within the next 18 months unless it can transition into an independent non-profit organization, officials said in July 2014. The northern New York hospital near the border with Canada expects to run out of money more than two years earlier than previous estimates.
Massena Memorial Hospital (MMH) filed a recent report with the Town Board after researching the future solvency of the hospital. According to the report, the Massena Memorial Hospital Board of Managers suggests that becoming a nonprofit entity will achieve two critical points that will turn the hospital around. The first is that the hospital could reduce costs by exiting their $4 million obligation to the New York State pension system. The second is that the hospital could fully collaborate with other health care institutions, which it cannot do now as a municipal entity.
Finances Worsen While Investigation Continues
During the research process, the hospital’s finances continued to worsen. “MMH, which is currently the town’s second-largest employer, cannot continue on the current path of losing more than a million dollars a year,” the report said. It warns of future cuts in staff and services, and the town’s potential liability of hospital debt which could add to residents’ tax burden.
The Town Council has asked hospital officials to investigate other options to prevent the closing. The Civil Service Employees Association recommended a three-year wage freeze and a switch to a new health insurance plan as a compromise that could give the hospital “some time to get on its feet as a nonprofit and establish the needed collaborative relationships with other health care institutions;” however, hospital officials disagree.
“According to an analysis by financial consultants Freed Maxick, a three-year wage freeze would save $7.6 million, but it is not enough to allow MMH to remain a municipal hospital,” the report said. “Even while the wage freeze was still in place in 2016, MMH would lose more than $2 million in 2015 and more than $1.5 million in 2016, leaving the hospital in the red in 2016 by nearly $900,000 and more than $2.4 million in 2017. The hospital could not continue to operate under that kind of debt.”
According to the report, updated projections show that if Massena Memorial Hospital continues down its current path as a municipally owned hospital, the hospital will be bankrupt in 2015.
Despite Report, the Hospital’s Status Remains Unclear
Joseph D. Gray, Massena’s Town Supervisor, said the report does not mean that the Town Council will choose nonprofit status. “I don’t think the report the hospital put out today changes the discussion,” he said. “I think it’s good information. It’s good that we see it. It answers some of the questions that I believe some of the Town Council had.” A meeting between the town board and the hospital is expected.
Massena Memorial Hospital is a full-service community hospital with 47 physicians in over 15 specialties. Over the last ten years, Massena Memorial Hospital has reinvested over $32 million in the facility with a new ICU, Telemetry Unit, Physical and Respiratory Therapy, Medical Laboratory and Women’s Imaging Center.