SOUTHAMPTON: Hospital's Losses to Be Revealed, State determining which health care facilities could be shut down

Southampton Hospital's board of directors has seen the institution's financial results for 2004, but the hospital will not show them to the public until Monday.

Donna Sutton, Southampton's director of community relations, confirmed this week that the hospital had suffered losses, but would say only that it lost less than it had the year before. In 2003, the hospital lost $2.5 million. In 2002, it lost $3.6 million. That change indicated "a positive trend," Ms. Sutton said.

The hospital has $40 million in outstanding loans.

Due to the terms of its 1999 bond issue, the hospital had until June 15 - 165 days from the end of its fiscal year - to show its audit to bond holders. Ms. Sutton said that the hospital was in compliance with those terms in that it had shared its audit with the bond holders' trustee, the Bank of New York.

In November, Gov. George E. Pataki created the Health Care Reform Working Group, which examined the role of Medicaid and health care in the state and recommended closing "unneeded" and financially strapped medical institutions and restructuring those that remained.

As part of the 2005-6 state budget, the governor then created the 18-member Commission on Health Care Facilities in the 21st Century, which will examine which hospitals in the state are underutilized. The members of the commission were announced on June 2.

The state also wants to reconfigure Medicaid payments for "public good services" such as emergency room, trauma, burns, and obstetrics, which are reimbursed at a lower level than high-end services such as cardiac surgery. According to the group, health care providers have embarked on a race to buy expensive technology for high-end services to offset the low reimbursement rate for more common services.

Southampton is participating in such a race, competing with Central Suffolk Hospital for a cardiac catheterization unit. The state often limits the number of facilities allowed to have such a unit in a given region. The investment in the new technology would be high - upgrading the hospital from film to digital records alone will cost $900,000.

The Health Care Reform Working Group used data collected by the federal Office of the Inspector General to conclude that community concerns about hospital closures were "unfounded." It cited statistics that 50 percent of the country's rural hospitals were within three miles of another inpatient facility. An additional 18 percent were within four to 10 miles of another facility.

Geographically, at least, the East End hospitals may not be at risk. The driving distance between Central Suffolk and Southampton is about 18 miles, and Montauk is about 40 miles from Southampton. It would be difficult to say that the region is overserved. It might be easier to conclude that the hospital is a drain on state resources.

In an effort to make all of their bottom lines look more attractive, the three members of the Peconic Health Corporation - Southampton, Central Suffolk, and Eastern Long Island hospitals - hope to gain income from a new property tax on the area's homeowners. The prospects for the passage of such an initiative are poor, however.

Although Assemblyman Fred W. Thiele, Jr. has introduced state legislation that must be passed to allow a referendum on the new tax, State Senator Kenneth P. LaValle said he was less inclined to do the same in the senate. While he has asked the hospitals to further explain their proposal, he does not believe special taxing districts are necessary or even possible. "It's not something that has a lot of appeal with the voting public," he said.

Mr. LaValle would prefer to see Southampton enter into a more substantial relationship with Stony Brook University Hospital than the one it already has with the New York-Presbyterian Healthcare System. What he is proposing is "not quite a full sponsorship" on Stony Brook's part, but it would go further in providing financial benefits to the hospital, he said. Under such a relationship, Southampton could continue its affiliation with New York-Presbyterian. He added that Eastern Long Island Hospital had already voted to join Stony Brook.

The East End Supervisors and Mayors Association has been speaking to the chief executive officers of the three hospitals over the past year. Southampton Supervisor Patrick A. Heaney will organize a public meeting of the five town boards sometime in the next few months, probably at Suffolk Community College or some other neutral territory, but he is "skeptical" that such a measure would succeed with voters.

If the towns and hospitals were to go forward with a tax, the towns would certainly require more accountability and demand greater specialization and cooperation between the hospitals so that non-urgent services were better parceled out among them.

Jerome Solomon, a hospital bond analyst with Bear Stearns, a New York brokerage firm, said it would only be natural for the community to make the hospital organization accountable for tax dollars.

"If the community is asked to subsidize health care via a tax, the community has a right to ask if this is the most efficient way to provide regional health care," Mr. Solomon said. "The hospitals involved will have to make a case that this money is needed. Likewise, the community will want a better understanding of the organization's financial wherewithal."

Mr. Heaney is particularly worried about the long-term exposure the tax would put on the community to potential continued losses. "It's a high burden on people who pay for health insurance to then have to pay for health care for those who do not pay their bills," he said.