Audit: SUNY Downstate Medical Center Faces Insolvency Within Months

State University of New York Downstate Medical Center in Brooklyn is in a heap of financial trouble, and the hospital could be insolvent as early as this May, according to a report (pdf) from New York Comptroller Thomas DiNapoli.

Mr. DiNapoli's audit, mandated under state law, aimed to see where SUNY Downstate Medical Center stood financially. The medical center provides services at three hospitals: University Hospital of Brooklyn, University Hospital at Long Island College in Cobble Hill and SUNY Downstate at Bay Ridge.

According to the audit, the medical center likely will not have enough cash to cover all expenses by this May and July at the latest. SUNY Downstate has also incurred "substantial" operating and non-operating losses, totaling more than $300 million from 2007 through 2011. In 2011 alone, the hospital lost more than $275 million.

Mr. DiNapoli and his team said many forces contributed to the hospital's dire financial situation, including increased costs for salaries and benefits, a high reliance on Medicare and Medicaid patients, debt associated with acquisitions and a lack of inpatient business. In 2010, the audit found that 25 percent of SUNY Downstate's inpatient beds went unoccupied, or an average of 100 unused beds every day.

The audit also blamed the hospital's "poor" financial condition on "a long history of weak governance and mismanagement." In 2011, 15 senior executives had an annual taxpayer-supported salary of more than $200,000 — a major concern for the comptroller's office considering SUNY Downstate had sent layoff notices to 469 employees with average salaries of $63,000. John LaRosa, MD, former SUNY Downstate president, made almost $400,000 before resigning last summer.

Mr. DiNapoli recommended several changes to the SUNY Downstate administration, most notably:

•    Work with the SUNY system, state policymakers and the Brooklyn community to implement immediate solutions to find fiscal stability; more specifically, a financial plan should lay out a timeframe and steps that need to be taken.
•    Monitor overtime pay and find new ways to reduce costs.
•    Consider cutting executive positions and re-evaluate executive salaries.

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