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MMH provides documents to firm studying privatization


MASSENA - Massena Memorial Hospital has begun providing documentation to the legal firm that’s doing a study to determine if they should privatize.

CEO Charles F. Fahd said they had received a request from the law firm of Hancock Estabrook, LLP, Syracuse, to provide the documents as part of the study.

“We did have some requests from Hancock Estabrook, our legal counsel, regarding the information-gathering process,” Mr. Fahd said.

Among the documentation requested by the firm was information about the hospital’s formation back in the 1950-52 time-frame.

“So we provided them as much information from the hospital archive as we had,” he said.

Mr. Fahd said they also provided the firm with copies of contracts, including physician employment contracts and other leasing contracts that are currently in force.

In addition, the firm requested copies of contracts the hospital has with both of its collective bargaining units, as well as contracts used for purchasing, contracts they currently have with professionals, and contracs that are used for services such as radiology, pathology and anesthesiology, according to the CEO.

“They also requested information about our Foundation and the current status of that, which is a 501(c)(3) not-for-profit corporation,” Mr. Fahd said.

Hospital officials had decided in August to move ahead with retaining the law firm to explore transitioning from a municipal hospital to a private, not-for-profit facility. They had received a formal engagement and retainer letter from Hancock Estabrook at the beginning of August.

They had agreed in July to hire the law firm at a cost not to exceed $100,000 for the study.

The study will consist of three phases. Phase one, which is currently underway, includes 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.

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 state’s pension program in 2002 has jumped to $4.4 million in December 2013, with a projected $4.8 million contribution in December 2014.

However, opponents of the plan to privatize say 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 recently 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.

Mr. Fahd has also said that among the losses they’re 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 recently that 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 hospital’s 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 noted that 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.

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