Aid for Brooklyn Hospitals May Come from Washington: Will it Be Enough?

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After Governor Cuomo's plea for federal aid to save New York's hospitals earlier this week, Secretary of Health and Human Services Kathleen Sebelius signaled her willingness to work with the state to keep hospitals in Brooklyn -- and upstate -- functioning. 

During his annual budget address this week, with two large, historic hospitals teetering on the brink of insolvency, Gov. Andrew Cuomo reiterated a call he and New York’s Congressional delegation have been making since last spring, for billions of dollars in federal funding to bail out the state’s failing hospital system.

"We have been propping up the system," Cuomo said. "It is a critical situation. We have no alternatives. The numbers are beyond the scope of the State government, and this is truly a crisis."

The funding push is part of New York's efforts to "redesign" Medicaid. Cuomo says these reforms have saved Washington $17 billion, and the state should get some of that money back to reinvest. In August of 2012, his administration applied for $10 billion in federal funding over five years to expand community health centers and bolster the cash-strapped “safety net” system that provides hospital care for poor New Yorkers.

Washington has already approved similar funding for California and Texas, according to State Medicaid Director Jason Helgerson, while New York has waited 18 months for a response from HHS. 

Cuomo's public push seems to have yielded results. Late Thursday, the Department of Health and Human Services made public a letter from Sebelius in which she asks New York officials to meet with her team next week "to review progress to date and address outstanding issues." She acknowledges that HHS has reached the "final step" in the approval process, and in a hand-written post-script notes that she looks forward "to working with you [Governor Cuomo] to complete this important waiver."


Meanwhile, one of Brooklyn's troubled state hospitals, Interfaith Medical Center, returns to bankruptcy court on Friday, a week after protestors occupied the hospital and the CEO, Patrick Sullivan, abruptly announced his resignation. In court, Interfaith is expected to announce details of a new agreement which will continue to keep the hospital open into March.

Interfaith has been in federal bankruptcy court since December 2012 and was poised to run out of money and close last month. A last-minute infusion of cash from Albany was supposed to keep the lights on through March, as long as Interfaith allowed nearby Kingsbrook Jewish Medical Center to assume control of much of the troubled hospital.

But talks among Interfaith, Kingsbrook and Albany broke down, and with little money left to make payroll, Sullivan announced last Friday that the hospital would stop receiving ambulances and begin making plans to transfer patients — preludes to a possible shutdown. With dozens of people gathered outside of his office protesting, the hospital board overruled Sullivan and restored ambulance service, while he received a police escort to his car. Though he had formally resigned two weeks earlier, he was to have remained in office for the rest of January.

"It was pretty loud in there, but it wasn’t disruptive to the rest of the hospital, and nothing was damaged," said Sharonnie Perry, who leads Interfaith’s Community Advisory Board. "Emotions were running pretty high. You’re talking about people’s livelihoods."

A lawyer for the hospital’s creditors said in a letter that Interfaith appeared to be "in chaos" — and that Sullivan blamed "the trashing of his office and threats to his personal safety as some of the reasons for his resignation."


Overall, the state has been trying to get Brooklyn’s aging hospitals to reinvent themselves. In 2011, a state commission proposed several hospitals combine forces and shift their focus from inpatient services to outpatient primary and specialty care. In addition to LICH, Interfaith and Kingsbrook, the panel focused on Brookdale, Wyckoff Heights and Brooklyn Hospital Center.

These all largely serve poor communities. Most of their patients either have Medicaid or no insurance, which is why the state has asked for federal intervention to staunch financial bleeding. 

"People frequently blame the management of these economically troubled hospitals," said Fred Hyde, a former hospital CEO who teaches at Columbia University’s Mailman School of Public Health. "But if your hospital is filled with poor people — those on Medicaid or uninsured — you’re not going to do well, no matter how good your management is."

Even if the federal government granted New York’s request for $10 billion in funding, New York will need to invest millions more to keep Brooklyn’s healthcare infrastructure operational. Hyde, who is also a consultant to unions, said the state has exacerbated these hospitals’ financial crisis, by aggressively adding people to Medicaid rolls, while cutting payments for hospitals. He said the state, and not just the federal government, will have to invest in the much talked about “transformation” of the large aging hospitals into smaller, more modern and more diffuse clinics.

"The feds have said they’re not going to pay for large construction projects,” Hyde said. “The state is going to have to put its own nickel in."

State Medicaid Director Jason Helgerson said this time around, that is exactly what the governor’s office wants to do. Cuomo has proposed a $1.2 billion capital fund for hospitals across the state as part of the 2014-2015 budget. Helgerson is hopeful Washington will take notice, and expedite the much larger $10 billion funding, which among other things would pay for increased staffing and extended hours to serve more patients through primary care and ambulatory care centers.

"We’ve provided 2,000 pages of documents," Helgerson said .  "We stand ready and willing, as we have, to meet any time, any place."