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State approval could come soon for Clifton-Fine Hospital

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STAR LAKE — Clifton-Fine Hospital is on track for approval by the state to become a nonprofit organization rather than a municipal hospital, which will allow it to exit the state retirement system.

A committee of the state Public Health and Health Planning Council has approved the hospital’s plan to transfer its assets as a public benefit corporation to Clifton-Fine Health Care Corp., which will operate the hospital without noticeable change except it no longer will participate in the state retirement system. The full board of the Planning Council is scheduled to meet Dec. 6.

“It’s looking really, really good,” Administrator Robert P. Kimmes said.

The hospital tried for two years to have the change made legislatively but was thwarted by the state Civil Service Employees Association.

Clifton-Fine, a 20-bed critical access hospital in a remote part of the Adirondacks, sought the change because it feared that skyrocketing pension costs would drive it out of business.

In 2009, the hospital’s payment for pensions was $290,000, but its contributions could exceed $1 million in two years. Pension costs have risen 250 percent in five years.

The hospital had operating losses of $632,970 and $452,442 in 2010 and 2011, respectively, because of the increased costs. To reduce expenses, the hospital eliminated pay increases, reduced its staff by 5 percent and renegotiated some supplier contracts.

After the legislative failure, the hospital decided to try for the change through its certificate of need with the state Department of Health.

“Nobody’s voiced any opposition,” Mr. Kimmes said. “It’s very realistic this could happen in the first quarter of next year.”

The hospital will replace the state retirement system with a 403(b) plan available to nonprofit organizations under which it will contribute an automatic 3 percent of income and up to 6 percent of income matching contribution.

“It’s still going to be a significant savings to the hospital,” Mr. Kimmes said.

The switch will have other benefits as well.

The towns of Clifton and Fine each have annually contributed $100,000 to the hospital in recent years, which will end after Clifton-Fine becomes a nonprofit.

“It will be a nice savings for our budgets,” Fine Supervisor Mark C. Hall said. “More importantly, this allows us to affiliate. We could not affiliate as a public authority. That became an important part of the equation.”

Clifton-Fine plans to ask several hospitals to make proposals it could consider to expand services and make itself more financially stable, Mr. Hall said.

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