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Lewis County hospital looking to keep new doctors out of pension system

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LOWVILLE — While Lewis County General Hospital officials have scrapped a plan to remove their highest-paid employees from the state pension system, they are taking steps to keep new doctors out of the increasingly costly program.

The hospital has formed Lowville Medical Practice PLLC, with plans to hire any future physicians as employees of that corporation, not the municipal facility itself.

“With pension costs increasing more than 300 percent over the past several years, we looked at alternatives to the New York State retirement system to identify an option that allows us to offer attractive retirement benefits while controlling the hospital’s costs,” said a fact sheet from the county-owned hospital. “We believe the best option is to create a professional limited liability corporation.”

While many doctors here are independent contractors with their own health insurance and retirement plans, the facility over the past several years has brought in many hospital-employed physicians who are eligible for state retirement benefits and the county’s health insurance plan.

That strategy was commended recently by a consultant from Stroudwater Associates, who suggested that ongoing federal health care reforms will, in a few years, benefit hospitals that employ primary care doctors. However, that has contributed to operating deficits under the current fee-for-service system, particularly with the skyrocketing pension payments that are based partly on employee income.

While the PLLC won’t affect any current employees, it could offer future savings by granting new doctors a private retirement package comparable to the state system that would be less costly to the hospital, said Timothy W. Ryan, human resources director for both the hospital and the county.

Private retirement plans also are more easily transferred than the state system, which is available only to those deemed municipal employees, Mr. Ryan said.

As with municipalities throughout the state, Lewis County General Hospital has seen a large spike in payments into the state retirement system over the past several years.

Annual pension costs at the facility, payable to the state each December, have grown from $1.6 million in 2009 to $4.8 million for this year and a projected $5.6 million next year.

Hospital officials last fall initially talked about pulling the facility’s eight-person administrative team from the state retirement system by moving the employees under a limited liability corporation.

County lawmakers at the time even passed a resolution allowing the administrators to get back into the county’s health plan upon retirement, giving them an incentive to stay on if that LLC had come to fruition.

However, following consultations with legal counsel, that idea was dismissed because of uncertainty with some provisions of the federal Affordable Care Act, particularly a determination on how health insurance claims will be handled for group-insured versus self-insured people, Mr. Ryan said.

“Chances are we could’ve passed the test,” he said.

If not, however, any claims for administrators in the proposed LLC could have added to their taxable income, and states will not be required to establish those rules until 2014, Mr. Ryan said.

Hospital officials decided that keeping administrators and current staff physicians as municipal employees, while shifting only future doctor hires, would be the safest and most easily implemented way to help control future retirement costs, he said.

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