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Lewis lawmakers consider LDC to aid struggling county hospital

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LOWVILLE — Lewis County lawmakers are considering the creation of a local development corporation to buy time for their municipal hospital and nursing home to improve its fiscal condition.

“The Board of Legislators is trying to address a pretty serious financial situation at the hospital,” said County Manager David H. Pendergast.

Lawmakers will hold a public hearing at their 9 a.m. Tuesday meeting on the creation of the nonprofit corporation, which a board of three to seven members would oversee.

An LDC could borrow money to help cover Lewis County General Hospital’s immediate operating losses without further draining county reserves, then pay it back over several years to lessen annual debt service costs.

“It gives them time to put whatever plans they are working on into effect,” Mr. Pendergast said.

The county is limited to short-term borrowing, requiring payback within 12 months, although that could be done in conjunction with long-term bonding, he said.

The LDC would take over the buildings and other physical assets of the hospital from the county, but the 400-plus workers would remain county employees and operations would remain the same, said County Attorney Richard J. Graham.

The proposed corporation would need to send out requests for proposals to private organizations to determine what they would pay for the facility to establish a value to borrow against, Mr. Graham said. And, if the hospital continued to hemorrhage money and be unable to cover debt payments, it would have the authority to eventually move toward privatization, he said.

However, the LDC is to work in consultation with legislators and hospital managers, and county officials are developing a financial review method, including some controls on hospital finances and fiscal goals, to guide that decision-making process, Mr. Graham said.

“They’re not going to do this in the dark,” he said.

The plan is to establish the corporation as a public entity, subject to state open meetings law and the Freedom of Information Act, and give the hospital a certain period of time — possibly a year or so — to make fiscal progress before considering any changes, said Board Chairman Jack T. Bush, R-Brantingham.

During a prior stint as a legislator and chairman nearly two decades ago, Mr. Bush initially supported a privatization plan that was eventually thwarted by opposition from hospital employees, residents and some county leaders. That effort led, instead, to the ouster of the private management firm that was running the facility and the hiring of a county-employed CEO.

Now, the chairman said, he would only support privatization as a last resort and made that point clear to potential LDC board members interviewed by legislators Monday.

“I would much rather see the hospital continue to be a county-owned entity,” he said. “But I would vote for privatization before I would vote to shut the doors.”

Hospital officials claim to have an operating deficit of about $130,000 per month, which would lead to a $1.5 million deficit by the year’s end.

However, county officials say the hospital in recent months has borrowed between $350,000 and $500,000 per month from the county’s fund balance, contributing to a roughly $5 million debt that they are concerned could deepen.

The hospital is also facing a pension bill in December of nearly $5 million, up from $4.27 million last year, and county officials are looking to avoid draining county reserves or covering any shortfall with a major tax hike.

“The county Legislature is not willing to put that burden on the taxpayers,” Mr. Pendergast said.

The hospital covered about half of last year’s pension payment with borrowed county reserve money.

Hospital officials have earmarked certain Medicaid reimbursements and intergovernmental transfer funding, intended to reimburse health care facilities partially for losses incurred on Medicaid, uninsured and charity care patients, for repayments to the county. While it is hard to predict when those payments will be made, hospital CEO Eric R. Burch has said he is fairly confident at least half of that $8 million will be forthcoming this year. A small amount has already come in and been applied to the debt.

The hospital administrator has said he is also looking for ways to reduce the burden of state retirement system payments on the facility. However, any changes, if implemented, likely would take a couple of years to result in significant savings.

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