COMPTROLLER REPORTS
NASSAU PUBLIC HOSPITAL IS "EFFECTIVELY OUT OF CASH"

The public corporation that runs Nassau County’s only public hospital is “effectively out of cash” and will require additional county subsidies in order to pay its bills, Nassau Comptroller Howard Weitzman said today, as he released his monthly analysis of the Nassau Health Care Corporation’s cash balances.

The new report, which reviews cash-on-hand as of April 14, finds that the hospital corporation’s cash and “cash equivalents” have fallen from $12.9 million in March to only $3.6 million in April. Working capital decreased to $2 million, a critically low level for an agency with an annual budget of approximately $490 million. In addition, the corporation has been deferring payments on a number of accounts payable, a practice likely to lead to a deterioration in the hospital’s relationship with its vendors.

“Nassau’s public hospital is in critical condition,” Comptroller Weitzman said. “Nassau University Medical Center remains the only safety net hospital system for Nassau’s uninsured population. In addition, because the county guarantees the corporation’s $300-million debt, its failure could have a drastic effect on Nassau County’s own finances.

“Nevertheless, before the county agrees to provide any additional subsidies to NHCC, we must have a sensible strategic plan in place and a commitment by the management team to carry it out,” Comptroller Weitzman said.

NHCC’s new Chief Operating Officer, former Deputy County Executive Arthur Gianelli is currently preparing an updated strategic plan that is expected to project the amount of additional county subsidies required to stabilize the corporation. The county’s consultant, Manatt, Phelps & Phillips, is assisting in developing the plan.

The April cash report also found that, to meet current expenses, the corporation has borrowed $8.6 million from a separate account reserved for malpractice claims. The Governor’s veto of Medicaid funding presents an additional threat that will have to be closely monitored, Comptroller Weitzman said.

He noted that approximately $16 million in funds are owed to the hospital corporation by the county (about $14 million) and the state (about $2.3 million). “These amounts, relating to unresolved bills and intergovernmental transfers, are a normal part of the ongoing business process between the county and the NHCC. They would have a minimal impact on NHCC’s current trend, which is into red ink,” he said. The county purchases services from NHCC and pays subsidies to it with a combined value of approximately $60 million annually.

In early April, the county received $120 million against future payments of a court settlement with the major tobacco companies; $98 million of that amount has been earmarked, but not yet allocated, to provide further county subsidies to NHCC.

Commenting on that plan at the time, Comptroller Weitzman cautioned against going forward with such additional subsidies until the county has reviewed the updated strategic plan  and obtains assurances that it will be implemented.

The Comptroller reinstated monthly reviews of the NHCC’s cash accounts in December 2005, following the corporation’s failure to meet its 2005 budgetary goals. The report is distributed to the NHCC Board, the County Executive, the Nassau Interim Finance Authority, the County Legislature, and the Comptroller’s Independent Audit Advisory Committee.

Review of NHCC’s Cash Balances as of April 14, 2006
(pdf file - Adobe Reader Required)