MASSENA - Massena Memorial Hospital officials are moving ahead with retaining a law firm to explore transitioning from a municipal hospital to a private, non-for-profit facility.
CEO Charles F. Fahd II told Board of Managers members Monday night that he had received a formal engagement and retainer letter from the law firm of Hancock Estabrook, LLP, Syracuse, at the beginning of August.
I suggested we write an acceptance letter to them, Mr. Fahd said.
Board members had agreed their July meeting to hire the law firm at a cost not to exceed $100,000 for the study. Mr. Fahd said the firm will be advised that any expenses over the $100,000 limit will need prior written approval.
The study will consist of three phases. Phase one will include the study of all contracts, such as vendors and employees, to see if anything would prohibit them from changing their status.
Phase two would be the implementation phase. Following approval from the Massena Town Council, they could start filing the paperwork such as the Certificate of Need to begin the conversion process.
The third and final phase would be going through the Internal Revenue Service to acquire their tax-exempt status.
Phase one could take two to three months, according to estimates, while phase two could take one to two months and phase three could go from four to six months.
Board member Darrell P. Paquin had noted in July that two firms they had interviewed before selecting Hancock Estabrook had recommended conducting a financial analysis feasibility study as part of the process.
Mr. Paquin said both firms had also suggested that a separate company conduct the feasibility study so there would be no suggested conflict of interest.
But Mr. Fahd said Monday that they were running into difficulties trying to find a firm to undertake the study.
Im still attempting to secure names of individuals for the feasibility study, which would review the hospitals contracts, he said.
Mr. Fahd said he had contacted the Healthcare Association of New York State and they had suggested two firms. But those didnt pan out, according to the CEO.
They were too busy and could not accept any additional work, Mr. Fahd said.
MMH officials have said that, facing projected financial hurdles in the future, they need to investigate the transition from a town-owned hospital to a private, not-for-profit facility.
Mr. Fahd had said that what was a $124,200 contribution to the states pension program in 2002 has jumped to $4.4 million in December 2013, with a projected $4.8 million contribution in December 2014.
However, speakers at a recent meeting of the MMH Community Coalition, a group that opposes the privatization of the hospital, said that pensions costs are actually expected to go down.
Sean Egan, director of member benefits and community relations at the Civil Service Employees Association headquarters in Albany, said that a market drop in 2008-09 forced the state to raise the pension costs. But now, Mr. Egan said, the pension system is doing well and contributions are expected to drop.
Well start seeing the pension costs go down, he told the more than 30 people who attended the Aug. 5 meeting at Dars Place.
Mr. Fahd has also said that among the losses theyre projecting is a reduction of $10.5 million in Medicare reimbursement over the next 10 years because of the federal Affordable Care Act; a $1.9 million reduction in Medicaid reimbursement over the next 10 years because of sequestration; and a $2.7 million reduction in Medicaid reimbursement over the next 10 years because of inpatient coding adjustments.
But Gary Storrs, a Washington, D.C.-based labor economist with the American Federation of State, County and Municipal Employees, said the Affordable Care Act might actually benefit health care facilities, including Massena Memorial Hospital.
He noted the Affordable Care Act means that number will go down as more people are insured.
From one perspective, it will provide more paying customers in a sense. The pool of uninsured should go down. That should help solve that problem. It seems like a rational kind of shifting, Mr. Storrs said.
CSEA members have said that, recognizing the hospitals financial concerns, they have suggested money-saving alternatives that were ignored which could have saved about $5 million.
Among them was to switch health insurance, a move that Mr. Egan said would have saved from $850,000 to $1.6 million.
In addition to the loss of Medicaid and Medicare reimbursements and the increased pension costs, Mr. Fahd has also said the state Department of Health also wants north country hospitals to seek formal affiliations, collaboration, merger or other sharing agreements to reduce duplicated services such as capital equipment acquisition and overall health care expenses in the region. But, as a municipal hospital, Massena Memorial is unable to do that because of the taxpayer money involved.
Questioned by audience members Monday night about why they couldnt share services, Mr. Fahd said that as a municipal hospital they could not engage in a endeavor that could possibly lose taxpayer money.
That would require us to put money up front and were unable to take the risk, he said.
If we have to invest money, theres the possibility for loss, Board of Managers President Andrew T. Spanburgh said.
Mr. Fahd, however, noted that they were able to contract with joint purchasing organizations.
We already do that. Were doing pretty well with purchases, he said.
Where we could do better was be to jointly negotiate with insurance companies for a better rate, something theyre unable to do as a municipal hospital, Mr. Fahd said.