The public benefit corporation that runs Nassau University Medical Center had a $102.3 million budget deficit in 2020 — a 60% increase from 2019 — prompting warnings by outside auditors that Nassau County’s only public hospital may not survive, according to a new report obtained by Newsday.
For the third year in a row, the annual audit of hospital finances said there was “substantial doubt” the hospital could continue to exist given the deteriorating financials.
NuHealth “has experienced recurring operating losses, a working capital deficit … and is dependent on the continuation of federal, state and local subsidies, certain of which have or are scheduled to end or be reduced,” said auditors from Mitchell Titus, an accounting firm in Manhattan.
The issues raise “substantial doubt about NHCC’s ability to continue as a going concern,” a term auditors use to warn that an entity might not survive.
What to Know
NuHealth, which runs Nassau University Medical Center in East Meadow, had a $102.3 million budget deficit in 2020 – 17% of its operating budget – according to independent outside auditors.
The shortfall continued a pattern of growing deficits for NuHealth, a public benefit corporation that posted deficits of $25.7 million in 2017, $46.6 million in 2018 and $63.97 million in 2019.
The auditors’ annual report was the third in three years in to express significant concern about the viability of Nassau County’s only public hospital.
Adam Barsky, chairman of the Nassau Interim Finance Authority, a state board that controls the finances of NuHealth and Nassau County, said fiscal problems at NuHealth have “gotten worse.”
The corporation continues “to run a billion dollar deficit in equity, which means they’re essentially insolvent, and the outside auditors have again, issued the ‘going concern’ opinion,” Barsky said in an interview with Newsday.
“It’s all not moving in the right direction,” he said. “There are not recurring revenues to cover recurring expenses. They will continue to draw down on their cash until they run out of cash and they will have to close.”
Release of the 2020 financial report, a requirement for state public benefit corporations, comes a month after former NuHealth Chairman Robert Detor resigned from the board.
Detor, who was appointed by Nassau County Executive Laura Curran in January 2020, said fellow NuHealth board members had failed to enact key reforms to right the corporation’s finances.
NuHealth Chairman Ed Farbenblum, whom Curran appointed in May, said the Mitchell Titus auditors had reached a “valid conclusion.”
“We have a lot of hard work to do,” said Farbenblum, a business owner and operator of 18 nursing homes who took helm of the board in May after Detor’s resignation.
Farbenblum said he planned to issue a “robust” three-to-five year plan to improve hospital operations within three months containing “granular performance budgets.”
He continued: “There are no sacred cows; we will look at everything.”
Mitchell Titus expressed concern about budget shortfalls and debt loads at NuHealth, also known as Nassau Health Care Corp., or NHCC.
$594.5 million The total budget for 2020. $917.1 million The total liabilities for 2020
The 2020 budget gap was part of a continuing pattern, the report showed. Past annual audits showed budget shortfalls of $25.7 million in 2017, $46.6 million in 2018 and $63.97 in 2019.
In 2020, NuHealth’s operating loss equaled 17% of the corporation’s annual budget of $594.5 million, according to the auditors report.
The A. Holly Patterson Nursing home in Uniondale, which NuHealth also operates, posted a $32.8 million operating loss in 2020 — up by 37% from 2019.
NuHealth’s liabilities, including payments to thousands of retirees, grew to $917.1 million last year, compared with $810.7 million for 2019.
The concerns that Mitchell Titus auditors expressed echoed those of consultants hired by NIFA.
The consultants, Alvarez & Marsal, of Manhattan, reported in March3 that NuHealth could not survive without taking dramatric action including closure of the NUMC emergency room, reduction of hospital staff from 3,400 to about 300 and the sale of A. Holly Patterson.
Health Care experts say it is not uncommon for public hospitals to run operating deficits, particularly those in communities where many patients lack private insurance plans that reimburse health care providers at higher rates than Medicaid or Medicare.
The share of NUMC patients on Medicaid patients rose from 14% to 24% between 2019 and 2020, auditors said.
The number of Medicare patients increased from 10 to 16%.
The proportion of patients with commercial insurance dropped from 19% to 10% from 2019 to 2020.
In a written response in June to the NIFA consultants’ report, Dr. Anthony Boutin, chief executive and president of NuHealth, said Alvarez & Marsal, “focused strictly on financial viability. Unfortunately, these recommendations did not consider that our mission is to provide treatment to the under-served regardless of their ability to pay.”
Boutin also cited declines in state aid to the hospital.
“It is important to point out that some of the challenges that we currently face are unfortunately beyond our control,” Boutin wrote.
NuHealth received some $170 million to $190 million a year in state aid in recent years, but expects only about $88 million this year, according to a chart Boutin provided to NIFA.
A key reason for the decline in…