Brooklyn Medical Center is Closing Hospital to Deal with Financial Problems

The SUNY Downstate Medical Center is planning to close one of its three hospitals in Brooklyn to deal with its financial problems.

In mid-January New York State Comptroller Thomas DiNapoli said that the center faced insolvency as soon as May. As of the end of 2012, the center had $154 million in outstanding debt, according to State University of New York spokesman David Doyle.

On February 8, the SUNY board of trustees voted to seek approval from the state Department of Health to close Long Island College Hospital in the Cobble Hill neighborhood of Brooklyn.

The medical center is losing $8-10 million a month, said center spokesman Bob Bellafiore, and closing the hospital would reduce its losses by $4 million a month.

The medical center has not yet applied to the Health Department to decertify the hospital, Bellafiore said. Once this is done, the center expects to have to wait for several weeks to receive the approval.

Besides planning to let go of the staff at the hospital to be closed, medical center president John Williams is planning to do layoffs at the rest of the center, Bellafiore said. However, employees at these two hospitals are covered by a different contract than the one covering those at the hospital to be closed. The contract at the remaining two hospitals may require employees be given one year notice before lay-offs, Bellafiore said.

Downstate Medical Center needs the state to give it $100-150 million in the near term, Bellafiore said. The center is currently lobbying the state for this money.

If the center runs out of money, SUNY would have to cover its bills, Bellafiore said. This would put pressure on SUNY, he said.

The medical center currently employs 8,000 people, making it Brooklyn’s fourth largest employer.

On Friday, Moody’s released “State University Board of New York Board Votes to Close Long Island College Hospital.” Brooklyn patient care revenue comprised just 5.8 percent of SUNY’s operating revenue in fiscal 2012. However, health care revenue accounts for a growing share of SUNY’s revenue, the report notes.

“Moody’s will continue to monitor the operating health of SUNY’s clinical and hospital enterprises for potential impact to the broader financial strength of the system,” Moody’s vice president Dennis Gephardt, vice president Karen Kedem, and managing director John Nelson wrote. “Ongoing deterioration of the hospitals and clinics operating performance could negatively impact the dormitory revenue bond rating if the general credit quality of SUNY weakens.”

Moody’s rates SUNY’s dormitory revenue bonds Aa2 with a stable outlook.

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Healthcare industry New York
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