The Chair of the Massena Memorial Hospital Board of Managers, Loretta Perez, said she was hopeful that MMH could begin to turn around its worsening financial condition after both the MMH Board of Managers and the Massena Town Board on Wednesday approved a resolution to approve MMH entering into a management agreement with St. Lawrence Health System.
The resolution – which states that the “agreement is in the best interests of Massena Hospital and the communities it serves” – authorized Perez to work with MMH counsel “to finalize, complete and execute an agreement with St. Lawrence Health System,” subject to approval from the New York State Department of Health.
St. Lawrence Health System was retained in late March to perform the financial assessment of MMH. All the work related to assessing MMH’s situation and any work going forward are being done in cooperation with the New York State Department of Health, which regulates all hospitals in the state.
Perez said, “The financial challenges facing MMH require us to take bold and decisive action to be able continue providing quality health care services for the people of Massena and the surrounding area. By entering into a management agreement with SLHS and working with state DOH, I am hopeful that we can begin to turn around the current fiscal quagmire and begin to right the ship.”
Town Supervisor Steve O'Shaughnessy said: “I have said that preserving quality health care for Massena is one of my top priorities. Having MMH enter into a management agreement with St. Lawrence Health System is a good first step to ensuring the future financial viability of MMH. For the last decade, hospital revenues have been essentially flat while expenses have continued to grow dramatically, while the daily census in the hospital is half today what it was 10 years ago. We must begin to turn this around or we face a potential health care and financial crisis.”
On Wednesday, St. Lawrence Health System presented a draft preliminary assessment of Massena Memorial Hospital’s finances and operations. The draft preliminary assessment found:
• A review of hospital performance since 2011 distinctly portrays a hospital suffering from the consequences of a declining local economy. Net patient service revenues are for the most part flat, yet expenses continue to grow.
• Like most other rural hospitals across the country, Massena Memorial has seen a sharp decline in utilization, including a 50.4 percent decline in average daily census from 2008 through 2018.
• In conjunction with this decline of core service utilization, a corresponding degradation of financial performance occurred. Net patient service revenues failed to grow materially while expenses rose, resulting in significant and unsustainable operating losses.
• The scale and effect of these ongoing operating losses have been masked to some degree by non-recurring other operating revenue infusions in three of the last five years. From 2014 through 2016 MMH received in excess of $13.2M from NYS in distressed hospital funding.
• MMH has $7 million in accounts payable, in addition to being millions of dollars behind in payments to the New York State and Local Retirement System.
• Conversion to a Critical Access Hospital (CAH) could mean a net revenue gain of $2.6 million in 2019. An application for CAH status was submitted in April.
• Next steps include determining if additional short-term funds from New York State are forthcoming, which would assist as longer-term solutions are crafted, and execution of a Supervisory Agreement and a Management Agreement that would allow St. Lawrence to operate and manage MMH, under NYS Department of Health supervision, while a long-term plan is devised. These agreements are subject to NYS Department of Health review and approval, which could take several weeks.