Downtown Hospital, the last large healthcare facility below 14th Street in Manhattan, is being primed for a takeover by New York-Presbyterian, one of the region’s largest networks.

New York-Presbyterian has been loosely affiliated with Downtown since 2005 — as a “passive parent,” according to CEO Dr. Steven Corwin. But with Downtown hemorrhaging cash, Corwin said the time has come to fully absorb the facility, which has played a key part in the history of Manhattan, from the bombing of the J.P. Morgan Company in 1920 to the terrorist attacks on September 11th.

“We want the citizens of New York to feel we’re a resource for them, and a place like ours is capable of providing needed services in areas that demand it,” Corwin said , in an interview with WNYC.

Crain's New York first reporting the story. State health officials need to approve the merger (PDF).

Downtown was previously affiliated with NYU. When it left in 2005, many of its doctors and patients went with it – particularly for the most lucrative specialties. Left behind was a community hospital with an active emergency room, primary care services for children and adults and a growing obstetric practice, none of which are especially profitable.

Making things worse, Downtown is situated in an area whose increasingly wealthy residents frequently go elsewhere for healthcare – a situation similar to that of St. Vincent’s Hospital, prior to its closure in 2010.

Still, several officers and employees have managed to do quite well. Downtown CEO Jeffrey Menkes earned $780,000 in total compensation in 2010, the most recent year for which records are available online. That's more than twice as much as Alan Aviles, the president of the much larger Health and Hospitals Corporation, the nation's largest municipal hospital system, but still a fraction of the $3.4 million Corwin made the same year, before he was promoted to CEO.

And Downtown, with 180 beds, is one of the smallest hospitals in the city. Corwin said New York-Presbyterian’s deep pockets can help offset Downtown’s losses from serving the relatively low-income population from neighboring Chinatown.

“We can carry it, despite the fact that it has a substantial Medicaid population," he said. "We think we can make a go of it."

Corwin estimated New York-Presbyterian and its medical school, Weill-Cornell, will invest about $125 million in Downtown in the coming years. That includes assuming up to $40 million in debt, improving facilities, and restoring to service large areas of the hospital that have been “moth-balled.”

“We probably will renovate a couple of units, try to get some more overall beds, because of the demand for them, and convert some double rooms to single rooms,” he said.

Downtown is the only one of five hospitals evacuated around Sandy that has re-opened. State health officials ordered it to close before the storm hit, in anticipation of a broad power outage in the area. The hospital was largely unscathed from the storm and did not suffer flooding, but did indeed lose electricity and steam.