Hospital Creditors Unhappy? Another Trojan Horse?


I found these news articles, (it is over one month old), that maybe your reader’s might find of interest.  – Patrick

You want us to take even less than we are owed?

Not 100% sure on how much this will equate to the actual outcome of the LBMS, but I thought your readers might find this interesting.  From an article in Crain’s last month (see below), it appears that the creditors of the hospital are unhappy with what they perceive to be South Nassau Communities Hospital (SNCH) low ball offer and the fact that the hospital has not aggressively enough marketed the sale to other prospective bidders.  Is it possible for the creditors to “market” the sale themselves?  Who would they target?
Be careful of Trojan Horses….

The second article below is from October of 2013, which notes that since LBMC has closed, SNCH has returned to profitability.  This leads me to question their true purpose for assuming control of the hospital, the altruistic part of me hopes it is to provide LB with outstanding medical care, sort of like when I go into a bar and hope the first 3 beers are on the house.  In reality both the publican and the hospital are businesses and need income to survive.  Giving me the first 3 for free is not going to make his bar profitable and (in my opinion) SNCH reopening LBMC as a full service hospital is not going to make LBMC profitable and might (read probably) remove SNCH from profitability.  So perhaps everyone needs to think what the real purpose for their interest is and are they the best dance partner that can be found.

Long Beach Creditors Protest

The Official Committee of Unsecured Creditors in Long Beach Medical Center’s bankruptcy case isn’t happy with the planned sale to South Nassau Communities Hospital. The committee’s proposed law firm, Klestadt & Winters, is scheduled to present arguments in court today on behalf of the members: ChemRx, Atlantic Dialysis Management Services and 1199 SEIU. The committee raises the issue of whether a sale to SNCH that was engineered by the state Department of Health and DASNY is the best financial outcome for creditors. It suggests that the deal wasn’t aggressively marketed because no broker or investment banker was hired to shop LBMC’s assets; only a few letters were sent to other hospital systems that amounted to “a plea for financial assistance,” according to court documents, online here. The unsecured creditors also said no effort was made to market the hospital’s affiliated nursing home to private nursing home operators, at a possible price even higher than the $21 million purchase price for LBMC. The unsecured creditors also questioned the blazing pace of the sale, with a suggested approval order by April 20. The pace “seems unreasonable to the committee and potentially designed to avoid meaningful competition for [LBMC’s] assets.” The creditors want to extend the process by three weeks so that the nursing home can be marketed separately.

Profitability returns to South Nassau Hospital

South Nassau Communities Hospital gained market share from the closures of Long Beach Medical Center and Peninsula hospital, according to a new Fitch Ratings report that affirmed a BBB+ rating on about $91 million of the hospital’s bonds. The closures were a key factor in the hospital’s $3.1 million operating gain—equal to a 1.5% operating margin—in the first half of the year, up from a $4.1 million operating loss on $392.6 million in total revenue in 2012.

South Nassau benefited from a “relatively steady utilization,” said Fitch. Inpatient admissions in Nassau County were down 5% in 2012 even before Sandy hit, and fell 5.3% in the full year including the effects of the storm. But the hospital’s inpatient volume fell only by 2% last year. It gained inpatient and emergency department volume from the two closures: an average increase of 120 admissions and 275 ED visits a month from the Long Beach area.

The hospital’s market share in its service area rose to 15.4% in 2012 from 10.2% in 1997. During that same period, New York City hospitals’ share declined to 14.3% from 20.5%.

Sandy damaged South Nassau’s outpatient dialysis center, generating a $1 million revenue loss during its two-month closure. Total losses related to Sandy were about $4 million. The hospital is on target to cut $1.9 million in expenses by the end of the year. The hospital, with 435 licensed beds (364 of them in operation) is located in Oceanside, on the south shore of Long Island. South Nassau just announced it will operate an ambulatory and urgent care facility on the site of its proposed merger partner, Long Beach Medical Center.

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4 thoughts on “Hospital Creditors Unhappy? Another Trojan Horse?”

  1. I guess “city hospital” is an oxymoron.
    Someone mentioned eminent domain. But I don’t much about it or if it applies here. Enjoy your day

  2. With what money? Another bond? Traditional hospital and emergency rooms – are on the decline in the US because of Obamacare. People who pay for health insurance are being transitioned to high deductible plans, $10K+ for a family plan is not uncommon. With a deductible like that, most people will never see a claim paid unless they have major surgery. Hospital ERs have high cost structures, too high to sustain when people are paying out of pocket for the care because they have an insurance plan with a $10K deductible. So who is going to use hospital ERs? People on Medicaid, and the elderly on Medicare – you can’t sustain that many ERs with just that customer base. Places like City MD in the west end are the future of medical care, they are all over the place outside NY and now you see them starting up in many places here. Traditional hospitals and their emergency rooms are shrinking because people can’t afford to pay for the high cost structure care they provide, as they increasingly pay out of pocket for the service.

  3. Sam, we can’t be stuck on a bridge in the back of an ambulance. EMTs in town can’t take 2-3 hours to take patients to SNCH. Storefront Urgent Care can’t help you if you have a stroke or a heart attack – and you don’t necessarily have to be old for that to happen, but you do have to get to a hospital quickly. If the city can install a $40MM boardwalk, certainly they can get the state to up the bid (from $21MM) for this hospital. And Sam, may you never get sick. And by the time you get old, perhaps the government will allow voluntary euthanasia for the elderly so you won’t ever need a hospital.

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