February 9, 2011
Delay of State Money for Merger May Force a Hospital in Brooklyn to Close
By NICHOLAS CONFESSORE and ANEMONA HARTOCOLLIS

A struggling Brooklyn hospital is making plans to shut down in March after a decision by the Cuomo administration to delay grants to help finance a merger intended to rescue the institution, officials said on Wednesday.

The hospital, Long Island College Hospital, on the border of Cobble Hill and Brooklyn Heights, announced in October that it was merging with SUNY Downstate Medical Center, a major public university and medical center, as part of a deal put together last fall by former Gov. David A. Paterson and state health officials.

The deal included some $62 million in state grants — $22 million for Long Island College Hospital and $40 million for SUNY Downstate — under a program intended to encourage efficiencies and mergers in New York’s health care system.

But State Department of Health officials told the hospital’s owner, Continuum Health Partners, on Tuesday night that they were delaying all undistributed grants under the program — more than a hundred awards totaling $683 million — as part of a broader effort to rethink the state’s sprawling Medicaid program.

With the state in a financial hole, officials are warning of significant cuts to reimbursement rates that will probably require the closing of some health care institutions around the state.

Josh Vlasto, a spokesman for Mr. Cuomo, said the administration was reassessing the undistributed grants “as part of an overall review of health care spending in order to ensure that grant money goes to the most viable projects and mergers.”

State officials are weighing several options for money now committed to the overall grant program, like redistributing some of it to other hospitals in distress or using it to help cushion the restructuring of the Medicaid system that the administration envisions. But no final decisions have been made.

The review is expected to take two to three weeks, Mr. Vlasto said, and most grants now in the pipeline are likely to be disbursed as originally intended.

But Stanley Brezenoff, president of Continuum Health Partners, said that conversations with state officials had left “a clear implication” that the grants for Long Island College Hospital “were seriously in question.”

If the $22 million grant to LICH were rescinded, Mr. Brezenoff said, the hospital, which he said was “running on fumes,” would run out of cash by mid-March. At that point, he said, he would be forced to begin bankruptcy proceedings and move forward with closing the hospital and laying off its 2,500 employees.

Without the state money, Mr. Brezenoff said, Continuum could not complete moving the hospital under the SUNY umbrella.

Mr. Brezenoff said that he was already putting together a draft closing plan and preparing to send out termination notices. He said that because the conversation with the state was so recent, he had not yet warned the employees that the merger might be called off.

Ellen Watson, a spokeswoman for SUNY-Downstate Medical Center, said its officials knew the grants were under review.

“But absent a formal announcement from the governor’s office, it’s too early for Downstate to comment,” she said.

Long Island College Hospital operates about 300 beds, though it is certified for 506. It annually delivers more than 2,500 babies and has 55,000 emergency room visits.

The original merger, announced in October, was considered a victory for Continuum and Governor Paterson. It came after the closing of two other hospitals — St. Vincent’s in Greenwich Village and North General in Harlem— that foundered under hundreds of millions of dollars in debt, operating losses and the economic downturn.

Mr. Brezenoff said that the hospital needed an infusion of $90 million to $100 million to survive, and that he had been able to pull together the money through other sources that were contingent on getting the state grants.

He expressed frustration with the idea that Mr. Cuomo might be withdrawing a promise that had been thoroughly vetted and publicly announced.

“This is a stunner,” he said. “When is something done, done?”

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