A statement released by WMCHealth on December 28 reported ongoing active conversations with New York State officials on a new financial stabilization plan for Kingston-based HealthAlliance of the Hudson Valley (HAHV).
The state has been reluctant to provide additional funding after the promised results from its current five-year commitment have proven insufficient.
“Given the prior partnership with the state and disclosure of the need for additional resources and time,” the hospital group said, “we expected the need to be met. We are hopeful the active conversations with the state will result in a resolution that prioritizes the healthcare needs of Ulster and Delaware County residents and surrounding communities.”
WMC said it had applied for supplemental funding made available each year to financially distressed hospitals (FDHs) through the vital access provider assurance program (VAPAP), filing an application in May.
Citing the opening of new consolidated hospital and targeted service-line investments such as its cardiac catherization lab and ambulatory services, HealthAlliance reported positive volume growth in 2023.
Still, more time and more growth is what HAHV needs to become fully solvent on its own. WMCHealth is looking for a two-year funding extension of the 2019 five-year stabilization plan with the state to account for delays associated with Covid, the delay of the consolidation of the new hospital as a result of closing the Mary’s Avenue campus to meet the state’s request for a Covid-only hospital, the regional vaccination effort, and the undisclosed impacts of the recent system-wide cyberattack on HAHV.
WMCHealth also noted $34 million in investments to subsidize HealthAlliance in 2023. While it was always assumed WMC would make contributions, that total was $16 million more than had been anticipated.
WMC has requested an increase of $5 million to cover the current year’s losses and a two-year extension of the initial plan.
“It’s important to note the original plan was based on financial projections developed in 2019 prior to the Covid pandemic and did not consider the associated delays or the impacts in the aftermath,” WMCHealth said in a statement.
A letter drawn up on the stationary of state senator Michelle Hinchey and co-signed by congressmember Pat Ryan, assemblymember Sarahana Shrestha, county executive Jen Metzger, Kingston mayor Steve Noble and four county legislators has been sent to governor Kathy Hochul and since published.
“We ask that you and WMCHealth negotiate in good faith and commit to a real, workable solution, before the end of the year,” the letter says in part, “that includes guaranteed funding from New York State to HealthAlliance Hospital to support uninterrupted operations and allow them to continue to grow services instead of reducing them.”
Bond downgrades
There are reasons for the state to be hesitant.
The entity that created WMCHealth is the Westchester County Health Care Corporation (WCHCC), which is a State Public Authority, a designation which allows the corporation to go deeper into debt without fear of dissolution than municipally bonded entities could or privately financed entities would.
Formed in 1997, the WCHCC reported its first operating loss, a total of $15 million for fiscal year 2001.
In its end-of-year financial reports from 2016 through 2022, WCHCC reported net position decreases totaling $162 million to the Authorities Budget Office. Records show that WCHCC held $773 million in debt at fiscal year’s end 2021 and carried an additional $127 million from the debt service of the Charity Health System’s (CHS) series 2015 bonds.
In December 2021, Moody’s investment service downgraded WCHCC’s bond credit rating to the lowest investment grade rating, Baa3.
The last time the WCHCC saw its bond rating downgraded was in 2005, just before Michael D. Israel assumed his present job as CEO of the health system.
Chief executive’s pay
John Lindsay, deputy communications director for the governor’s office, said that WMCHealth had received over $160 million in state taxpayer funding over the last five years, tens of millions higher than the $104-million commitment the state made in 2019.
“WMCHealth will have $109 million in cash at the end of 2023,” said Lindsay, “and we encourage them to use these resources to serve the Kingston community versus pay for their top executives.”
Reporting $1.7 billion in expenses at the end of 2022, the WCHCC missed out by one spot in making the top-ten list of New York State public authorities reporting annual expenditures of more than $250 million.
The top two spots as measured by expenses belong to New York City’s MTA and New York City’s Health and Hospitals Corporation (NYCHHC), with $18.65 billion in expenses and $13.17 billion in expenses respectively.
The highest-paid chief executive on that top-ten list, Janno Lieber, oversees the MTA, the largest public transportation agency in North America, with a total workforce of 60,000 employees, serving a population of 15.3 million people across a 5000-square-mile travel area.
According to publicly available NYS employee-salary information reported in 2020, Lieber earns just ten percent of what Michael D. Israel, president and chief executive officer of WMCHealth, pulls in.
Israel makes a touch above $3.4 million a year in total compensation, more than every chief executive on that list of ten public authorities put together. Israel’s second in command, senior executive vice-president and CFO Gary Brudnicki, makes $2.32 million in annual compensation.
Of course, making the trains arrive on time isn’t brain surgery. Or heart surgery. Or cancer treatment. The WCHCC endeavors to provide all three, as does the New York City Health and Hospitals Corporation, which administers the largest municipal health care system in the United States. Its chief executive officer, Gregory Calliste, is paid $314,142.
While Israel oversees a 1700-bed healthcare system at nine hospitals with a workforce of 3849 employees, and reports $693,202,280 in existing debt, Calliste oversees a 4139-bed healthcare system at eleven hospitals with a workforce of 50,356 employees, and reports $325,370,000 in existing debt.
As recorded by a nameless scribe in an aggressive 2012 Westchester Magazine article titled Management Secrets of Top Westchester CEOs, “Israel has been excoriated by the unions and the press for closing units, outsourcing services, and laying off hundreds of workers — most recently, 250 positions cut in response to unexpected pension costs imposed this year by the state.”
Serving the community
The letter sent to the governor by the assorted elected officials characterized the way healthcare gets funded in America as remarkably broken, but they still expressed hope for substantial changes in how healthcare could be funded at the state and even the federal levels.
“It is incumbent upon us right now to ensure HealthAlliance Hospital stays on track,” the elected officials said in their letter, “to serve the community we love.”
The healthcare provider has been saying that its responsibility to communities across its entire network will force it to explore expense-reduction options if it can’t find a viable resolution with the state in the immediate future.
For the HealthAlliance hospital in Kingston, recently designated a level 3 trauma center, those cuts would be grievous indeed.
County executive Metzger noted in a statement published separately that HealthAlliance had already seen drastic cuts, like those to previously existing inpatient mental-health and detox services in Kingston.
“Among the list of services singled out for the chopping block absent an agreement with the state on financial assistance,” Metzger said, “are “inpatient care, labor and delivery, partial hospitalization for mental health, as well as stroke intervention.”
These services, though relatively unprofitable for the hospital, are of critical importance to local health and well-being, Metzger asserted.
She wants strings attached to continued state funding for the Westchester-based public authority running HealthAlliance.
“Any financial agreement with HealthAlliance,” said Metzger, “should come with the clear understanding that those funds will be clawed back with any reduction in existing or planned hospital services.”
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