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Massena Memorial Hospital suffers record loss of $3.3m in 2013

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MASSENA — Massena Memorial Hospital officials painted a bleak financial picture of the municipally owned hospital at its board of managers meeting Monday and delivered a less-than-promising prognosis.

The hospital reported a record net operating loss of $3,309,680 in 2013, after running $2.3 million in the red for 2012. It wrote off $3.7 million as bad debt last year.

Hospital Chief Executive Officer Charles F. Fahd II said the bottom line is closely tied to the region’s economy and took hits with the loss of manufacturing jobs at General Motors and Reynolds Metals.

He said hospital officials have reviewed their numbers since Alcoa announced last week that will shut down its remaining two potlines at the East plant.

Mr. Fahd estimated that Alcoa employees and their families generated $2.6 million in revenues for Massena Memorial in 2013.

“That’s a rough estimate, but if they eliminated 35 percent of their jobs here, you can see the financial impact on the hospital is huge, significant, possibly seven figures. We are concerned like everyone else in the community,” he said.

Hospital board member Gary Borgosz, a former GM management employee, said the closing of the Alcoa East plant won’t mean all of its 332 employees will lose their jobs. He said the loss of the GM Powertrain plant suggests that some Alcoa employees will retire and others will stay in the community and find new employment.

Mr. Fahd pointed out the hospital still was likely to take a major hit if there are significant job reductions at Alcoa. “There was a $2 million hit to our bottom line the year after the GM plant,” he said.

He warned hospital board members the volumes projected in the 2014 budget likely would fall short in the wake of the Alcoa announcement. “The loss of 200, 300 jobs in this community is substantial,” he said.

The bleak financial news comes at a time when hospital officials are exploring seeking approval from the Town Council and the state Department of Health to change the facility’s status from municipal to private not-for-profit.

Hospital officials have said privatization would have three significant effects: it would affect Massena Memorial Hospital’s long-term bonding, it would allow the hospital to collaborate with outside agencies, such as other nonprofit area hospitals, and it would remove employees of the hospital from the state’s pension system and substitute a different type of retirement plan.

Hospital officials have said their bottom line has been negatively affected by changes in federal reimbursement for Medicare patients, with a 13 percent jump in hospital patients classified as observation visits and a 3.4 decrease in inpatient discharges in 2013 compared with 2012.

“Our volume is almost identical from last year to this year,” Mr. Fahd said. “Our number of observation visits increased by about 100 patients from last year, and our inpatient discharges dropped by about 100 patients. That’s the trend.”

Massena Memorial Hospital reported 2,513 inpatient discharges in 2013 compared with 2,600 in 2012, while observation visits grew from 717 in 2012 to 812 in 2013.

“The normal revenue for a three-day visit for a Medicare inpatient admission is $6,000, compared to $1,200 for the stay for a patient classified as an observation visit,” Mr. Fahd noted. “It’s the same everything. That patient is in the same room, same nurses. Most observation patients think they are inpatients.”

“We’ve been gaining about 100 more observation visits a year for the past few years times $4,800 in lost revenue for each patient. It’s a lot of money we are losing. It’s an effort by the federal government to cut back on paying for medical care,” Mr. Fahd said.

Hospital spokeswoman Tina R. Corcoran said a number of factors on a patient’s chart are used to determine whether a person entering the health care facility is classified as an inpatient or an observation visit.

For example, she said, a patient entering the hospital complaining of chest pain would be classified as an observation visit if it was determined that he wasn’t suffering from a heart problem when he was discharged.

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