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New arrangement in works for Gouverneur hospital

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GOUVERNEUR — E.J. Noble Hospital will dissolve but its operations will continue under a new entity, Gouverneur Hospital. It will fall under the umbrella of parent corporation St. Lawrence Health System, which will also oversee Canton-Potsdam Hospital.

“I think this is a very positive step for the region. St. Lawrence Health System will create a larger, stronger system. It’s expected the state Department of Health will appreciate better planning,” said Rebecca J. Faber, spokeswoman for the two hospitals. “I think the people of Gouverneur will see their core services improve. The Gouverneur community will have a hospital. That’s the important thing.”

E.J. Noble will soon file a petition in state Supreme Court for judicial dissolution, which would mean the sale of basically all of its assets to Gouverneur Hospital. The plan is being reviewed by the state Health Department, which is considering an establishment certificate of need application.

“It provides a fresh start and clean slate,” Ms. Faber said.

The change would not wipe out the hospital’s debts, but it would allow for a restructuring. Along with the new beginning would come a new name.

Under the plan proposed to the state, St. Lawrence Health System will have CPH and Gouverneur Hospital as affiliate organizations. Each hospital will have its own board of directors with representation on the SLHS board.

“The sea changes occurring in hospitals around the country require successful organizations to create new corporate structures,” CPH board Chairwoman Margaret E. Madden said in a statement. “SLHS will create a collective entity to better position us to meet the challenges of the rapidly evolving healthcare environment. Ultimately, all of our communities will be better served.”

E.J. Noble has had a tumultuous year after years of financial difficulties.

The Department of Health shut down its laboratory for deficiencies Sept. 28. The closure forced the hospital to stop providing a number of services, including its emergency room, until a partial reopening of the lab — under the supervision of Samaritan Medical Center, Watertown — was approved in October. E.J. Noble finalized a management agreement with Canton-Potsdam Hospital, Potsdam, in March.

The turmoil took its toll. In 2012, the hospital lost $4.5 million.

“In just the first seven months of 2013, E.J. Noble has lost $3.2 million. E.J. Noble Hospital has received New York State Department of Health support since March, 2013, but that support will end in December,” board Chairman Michael J. Burgess said in a statement. “E.J. Noble simply doesn’t have the resources to continue to operate thereafter. The conclusion is that this hospital is unsustainable in its current form. It’s high time for a new beginning.”

The bulk of a $9.3 million Healthcare Efficiency and Affordability Law grant arranged through the Health Department covered the hospital’s losses while it worked on the restructuring plan, Ms. Faber said.

The step avoids a bankruptcy, Mr. Burgess said.

“Hospitals all over the country have experienced significant financial losses, with rural hospitals being especially hard hit,” he said. “Couple this with wholesale changes to our health-care system, and you have hospitals that are in very vulnerable positions. As a result, many small hospitals are struggling to stay viable, and consolidation is what we’re seeing.”

The majority of services provided by E.J. Noble will be offered by Gouverneur Hospital, he said.

Changes that have been made or that are in the works include designation as a critical access hospital — which will cut the number of patient beds and increase reimbursement from Medicare — the return to the in-house laboratory of a number of its functions, an upgraded operating room which reopened for some procedures, and the advent of a six-provider primary care center that will be operated by Community Health Center of the North Country.

The hospital has been working diligently on quality improvement which patients may notice, Ms. Faber said. The change in administrative oversight will likely not be apparent to most patients, she said.

The decision to seek a judicial dissolution came after an analysis by the E.J. Noble board, which had the assistance of a global turnaround and restructuring firm.

“This new beginning also builds on the Gouverneur community’s reputation for resilience and innovation,” Mr. Burgess said. “It’s a reason for great optimism about the future of health care in Gouverneur.”

The financial condition of Kinney Nursing Home, which is affiliated with E.J. Noble, was not available but it typically posts an annual loss. The nursing home, under the oversight of United Helpers, has patients in nearly all of its 40 beds.

“We’re continuing to evaluate operations,” Ms. Faber said. “It remains open and operating for the foreseeable future.”

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