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Massena Memorial Hospital suffers record loss in 2013

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MASSENA - The financial picture painted by Massena Memorial Hospital officials at Monday’s meeting of its board of managers was bleak, and their prognosis for the future was less than promising.

Massena Memorial Hospital reported a record net operating loss of $3,309,680 in 2013 after running $2.3 million in the red in 2012.

And with changes in federal reimbursement and potential job losses associated with the closing of the Alcoa East plant for the future is looking about as bright as the $3.7 million the hospital wrote off as bad debt last year.

Hospital Chief Executive Officer Charles F. Fahd II, FACHE, said the facility’s bottom line is closely tied to the region’s economy and took hits when Alcoa bought Reynolds and employee numbers dropped in Massena and when General Motors closed its Powertrain plant in the community.

He said hospital officials have reviewed their numbers since Alcoa announced it was permanently shutting down its remaining two potlines at the Alcoa East plant.

Mr. Fahd estimated is that Alcoa employees and their families generated $2.6 million in revenues for Massena Memorial in 2013. “That’s a rough estimate, but if they eliminated 35 percent of their jobs here you can see the financial impact on the hospital is huge, significant, possibly seven figures. We are concerned like everyone else in the community,” he said.

Hospital board member Gary Borgosz, a former GM management employee, cautioned the closing of the Alcoa East plant won’t mean all of its 332 employees will be leaving Massena. He pointed out the GM experience reveals that some Alcoa employees will retire and others will stay in the community and find new employment.

Mr. Fahd pointed out the hospital was still likely to take a major hit if there are significant job reductions at Alcoa in Massena. “There was a $2 million hit to our bottom line the year after the GM plant,” he said.

He warned hospital board members the volumes projected in the 2014 budget would likely fall short in the wake of the Alcoa announcement. “The loss of 200, 300 jobs in this community is substantial,” he said.

The bleak financial news comes at a time when hospital officials are exploring seeking approval from the town board and state Health Department to change the facility’s status from municipal to private not for profit status.

Hospital officials have said privatization would have three significant impacts for the hospital: it would affect MMH’s long-term bonding, it would allow MMH to collaborate with outside agencies, such as other, nonprofit area hospitals and it would remove MMH employees from the state’s pension system and instead provide them with a different type of retirement plan.

Hospital officials have said their bottom line has been negatively impacted by changes in federal reimbursement for Medicare patients with a 13 percent jump in hospital patients classified as observation visits and a 3.4 decrease in in-patient discharges in 2013 compared to 2012.

“Our volume is almost identical from last year to this year. Our number of observation visits increased by about 100 patients from last year and our in-patient discharges dropped by about 100 patients. That’s the trend,” Mr. Fahd said.

Massena Memorial Hospital reported 2,513 in-patient discharges in 2013 compared to 2,600 in 2012, while observation visits grew from 717 in 2012 to 812 in 2013.

“The normal revenue for a three-day visit for a Medicare in-patient admission is $6,000 compared to $1,200 for the stay for a patient classified as an observation visit. “It’s the same everything. That patient is in the same room, same nurses. Most observation patients think they are in-patients,” he noted.

“We’ve been gaining about 100 more observation visits a year for the past few years times $4,800 in lost revenue for each patient. It’s a lost of money we are losing. It’s an effort by the federal government to cut back on paying for medical care,” Mr. Fahd said.

Hospital spokesperson Tina R. Corcoran said a number of factors on a patient’s chart are used to determine whether an individual entering the health care facility is classified as an in-patient or an observation visit. For example, she said a patient entering the hospital complaining of chest pain would be classified as an observation visit if it was determined they weren’t suffering from a heart issue when they were discharged.

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