Interfaith Hospital struggles to keep out of the ICU

December 4, 2012 Raanan Geberer Brooklyn Daily Eagle
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Interfaith Medical Center has filed for Chapter 11 bankruptcy protection, but it still seeks $20 million in New York state “debtor-in-possession” funds to keep it up and running during the reorganization – to keep it out of the ICU, as it were.

The hospital, which has been in and out of financial trouble since the 1980s, announced its filing on Monday in the U.S. Bankruptcy Court for the Eastern District of New York (in Downtown Brooklyn).

Luis Hernandez, president and CEO of Interfaith, blamed the hospital’s financial state on “New York State’s drastic Medicaid reductions in 2010. Because the people we serve are predominantly poor and fully 65 percent are dependent on Medicaid or Medicaid-managed care, we have had a unique deleterious financial challenge of being dependent on the State’s Medicaid reimbursements.”

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“Prior to those rate reductions, Interfaith Medical Center operated with positive operating margins. However, the implementation of the New York State APR-DRG reimbursement methodology resulted in approximately 40 percent reduction in IMC’s base reimbursement rate,” he continued in a statement.

Melissa Krantz, a spokeswoman for Interfaith, added that another cause of the hospital’s predicament stemmed from the fact that the state Health Department’s “Brooklyn Work Group” of its Medicaid Redesign Team recommended that Interfaith merged with the more stable Brooklyn Hospital Center and Wyckoff Heights Medical Center, another smaller hospital.

Wyckoff dropped out of the merger, Krantz said, and the Brooklyn Hospital Center was “moving too slowly” with the merger. Brooklyn Hospital Center did not return calls to the Eagle by press time.

Regardless of the cause, Interfaith clearly owes a lot of money. Crain’s New York Business, a business publication, reported that that the hospital has total assets of $142.4 million and liabilities of $341 million. “Its largest unsecured creditor is the Centers for Medicare & Medicaid Services, owed $16.1 million. Behind the federal agency is the Dormitory Authority of the State of New York, owed $12.2 million,” according to Crain’s

Krantz stressed that while bankruptcy proceedings are under way, the hospital is up and running and “people are getting paid.”

In the meantime, a group of Brooklyn elected officials, including Borough President Marty Markowitz, Congressman Ed Towns, Councilwoman Letitia James and others, drafted a letter to Gov. Andrew Cuomo, urging him to grant the hospital the $20 million in funds needed to keep the hospital temporarily afloat.

“If you look at a map of Central Brooklyn, we’re it—we’re the only hospital in Bedford-Stuyvesant,” stressed Krantz.

The letter from Markowitz and the officials states:
“The Chapter 11 filing by Interfaith Medical Center has had a very traumatic effect on not only those Brooklynites who reside within Interfaith’s catchment area, but also the communities beyond.

“While Interfaith’s catchment area overlaps with a number of other healthcare facilities, those persons who depend upon Interfaith for healthcare services approximate 450,000 to 650,000. The outcome of the Chapter 11 case and the reorganization of Interfaith’s delivery of healthcare services are of vast importance to those individuals and their families.”

Whatever Interfaith’s problems are, the hospital is not alone. A report by the Greater New York Hospital Fund from 2008, “The Deteriorating Financial Condition of New York City’s Nonprofit Hospitals,” reads:

“Since 2000, 11 hospitals have closed and an additional six are in, or have recently emerged from, bankruptcy. According to this year’s update of hospital financial ratings by the United Hospital Fund, more than one-half of hospitals (eighteen of thirty-four) were either in jeopardy or at risk in 2006, and facing such serious financial problems that some will not survive without a significant change in their operations or circumstances.”

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