2011-08-12 / Columnists

The Rockaway Beat

PHC Closing: More Questions Than Answers
Commentary By Howard Schwach

There is no doubt that one day, sooner than later – perhaps within the next 30 days, perhaps at the end of October – Peninsula Hospital Center will close its doors for good.

That will be a blow to the wellbeing of everybody who lives on this small peninsula.

The closing should not come as a shock to anybody who has been following the story.

The hospital has been in dire financial straits for years.

That is why it was sold to the giant healthcare provider, MediSys, two years ago. MediSys was the “White Knight” that was supposed to ride into town and rescue the hospital in distress.

It did not. Instead, PHC went deeper in debt and was less able to pay its bills. At the same time, the CEO of MediSys was arrested and charged with bribing several state politicians for favors related to the firm.

At the time, we questioned whether the arrest of the CEO would impact PHC. We were told that the problems were being resolved and that PHC was a stable institution that would not close down.

There were clear signs that problems existed. There was a time when the hospital could not make payroll and it attributed that fact to a computer glitch.

There were several times when PHC could not make its payments to the benefit fund. Officials worked out a payment deal that they then defaulted on.

MediSys provided healthcare insurance under its own plans and promised the union it would repay what it owed. To date, that has not happened.

Several local doctors ended their affiliation with PHC, stating that they could no longer in good conscience send their patients to the troubled hospital.

At the same time, PHC CEO Bob Levine was telling the doctors affiliated with the hospital the same thing. He continued to tell them that the hospital was not going to close until last week, when MediSys made the announcement and sent a memo to PHC’s staff that it was going to send a closing plan to the state.

There are more questions than answers relating to the closing.

PHC owes $30 million to the Local 1199 benefits funds. It owes a like amount to its suppliers.

It owed the truth to its employees, its doctors and nursing staff, and never paid off on that debt, right to the end when employees were being told that everything was OK the day before the announcement of the closing was made.

It now looks to most observers that the closing is part of a deal between MediSys and Local 1199 that is all about the money.

Sources have told me that both Medisys and the union would lose upwards of $15 million dollars each should the hospital go into bankruptcy and a court referree took over.

By closing the hospital instead of going the bankruptcy route, each of them stand to get all of their money back, and more.

It’s all about the money, honey.

Let’s see. of we go into bankruptcy, we lose lots of money, but 1,000 people keep their jobs – at least for now.

On the other hand, if we close down, we get all of our money back, but those 1,000 people are out of work and the peninsula loses a vital hospital.

Tough choice, but we’ll take the money.

That is the reality of the situation as I see it, and nobody has said that it is not true. That is why one union rep said at the PS 114 meeting that he felt betrayed. Hospital officials have said all along that the financial problems stemmed from lower payments and late payments for Medicaid and Medicare patients, problems faced by dozens of hospitals that serve underserved communities such as Rockaway.

Officials argued that all the people with health insurance went off the peninsula for medical care, leaving PHC with those who walked in or were transported in without any insurance at all.

While all that is probably true, it doesn’t all add up to a deficit of 60 million bucks.

That’s why the staff, at a rally held on August 3, demanded that the state probe the situation to find out just where all the money went.

While there are many rumors that the administration was stuffing their pockets while the hospital center suffered, there is no proof of the allegation.

That the hospital was mismanaged is the more likely reason, many insiders say.

One doctor who was at the rally told the Daily News, “I believe there are shady business practices at PHC that in part have led to its demise.”

Others agree, but so far no real evidence has surfaced.

One staff member who worked in the office told The Wave that the hospital was slated to go into bankruptcy, which would have saved 1,000 jobs and allowed the hospital to keep operating under supervision, just as St. John’s did several years ago. In that case, the hospital emerged from bankruptcy stronger than ever.

The insider says, however, that the idea of bankruptcy was dismissed because the union would have lost up to $15 million under any bankruptcy plan and MediSys would also have lost a large amount of money.

“The union put its owed money above the jobs of its members,” the insider said. “It’s involvement in the decision not to seek bankruptcy should be investigated by the state.”

That insider charged that, without a bankruptcy plan, MediSys could sell off the nursing home and other assets and come out making money on the closing.

When I asked MediSys officials about the possibility of bankruptcy, I got a glib answer.

“We’re staying away from bankruptcy because then the lawyers will get all the money,” the official said.

Given that there will be no bankruptcy and the hospital will close, the employees and the community will be the biggest losers in the closing. While Nelson Toebbe, the CEO for St. John’s Episcopal Hospital told The Wave that it was gearing up to take over all of PHC’s former patients, it is clear from observing the hospital’s emergency room last week that it is not close to being able to do the job. Perhaps that will change, but there is real evidence that one hospital at the far eastern end of the peninsula will not serve the community well. When PHC closes, Rockaway will have only .06 hospital beds per 1,000 residents. In Manhattan, for example, there are seven hospital beds for each 1,000 residents. Insiders say that SJEH can handle 20,000 emergency room visits each year. It already handles close to that number. PHC saw 30,000 ER visits last year. How will it handle 50,000 visits next year? We can only wait and see.

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