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Serving the communities of Massena and Potsdam, New York
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Massena Memorial Hospital officials consider privatization

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MASSENA — Faced with possible revenue cuts of $2 million per year, Massena Memorial Hospital officials are exploring turning the municipal hospital into a private, nonprofit corporation.

Joseph Ward, a former nurse and president of MMH’s New York State Nurses Association union local, said former colleagues told him they’d recently been approached by MMH Chief Executive Officer Charles F. Fahd II about the possibility of privatization as a solution to the hospital’s ongoing fiscal issues.

Privatization could save the hospital the costs of paying into the state employees retirement fund.

If the hospital were to switch to a contributory pension system, such as a 401k plan, the amount an employee contributes to the plan would define his or her retirement benefits.

The possible change in retirement plans has left some employees concerned about the level of benefits they will receive upon retirement should MMH’s board of managers elect to privatize the hospital, Mr. Ward said.

Some employees are already beginning to look for jobs elsewhere due to the possible change, he said.

“The morale down there is really low. A lot of people took jobs there because of the benefits,” Mr. Ward said. “It used to be a good hospital, but lately, in the last few years, it’s lost a lot.”

Mr. Fahd said MMH officials are considering all their options to compensate for a slew of federal revenue cuts that may reduce the hospital’s revenue by approximately $15 million over the next 10 years.

According to Tina Corcoran, senior director of public relations and planning at MMH, those cuts include $1.6 million from the Affordable Health Care Act, $260,000 from in-patient coding adjustments and $190,000 from the sequester, which will reduce Medicare reimbursements by 2 percent if politicians fail to reach a deal by Friday. Lawmakers have already approved the first two pieces of legislation.

And although the sequester is not a certainty, MMH officials expect so see revenue cuts from any deal that would avoid the sequester.

“We’re not sure which devil we want to see come to fruition, whether or not we want to see the sequestration — with 2 percent cuts across the board, and to know what that’s going to be and what that’s going to cost us — or whatever else they put together to offset the sequestration,” Mr. Fahd said.

Supervisor Joseph D. Gray said he was not aware MMH officials were considering the possibility of privatization, but noted the municipal hospital would need prior permission from the town to separate. Mr. Gray also said the town would have to be reimbursed for MMH’s multi-million dollar assets.

“The town would look to be made whole — in other words be paid — for the costs of those assets. I don’t know how that would work,” Mr. Gray said.

Mr. Gray said he would be willing to consider such a deal if approached by MMH officials seeking privatization.

MMH is already in a difficult budget situation for the year, having operated with a net loss of almost $390,000 in January. MMH officials said Medicare reimbursements make up 39 percent of the hospital’s revenue, and they fear that in order to stomach these new cuts they may be forced to reduce their service to the community.

“If another $2 million a year comes out of our bottom line, we are going to be hurt severely,” MMH Board of Managers Chairman Darrel P. Paquin said.

MMH officials say the discussions of privatization are still preliminary, and that the board has not taken any action toward privatization.

Mr. Paquin said the hospital board would have to “gather knowledge” on how to reimburse the town for its assets and become a private entity, should they chose to go down that path.

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