It’s been more than two years since Eastern Long Island Hospital’s board of trustees voted to become part of a Stony Brook University-led health care system and the North Fork’s 90-bed community hospital is still waiting for the deal to close.
ELIH president and CEO Paul Connor said in an interview Wednesday the Greenport hospital is “waiting for the day when we can close with Stony Brook like Southampton did,” but he does not yet know when that will be.
Nearly five years passed before Southampton Hospital’s merger with Stony Brook University Hospital was completed. Southampton and Stony Brook announced their intended merger in October 2012; the deal was completed Aug. 1.
SUNY trustees approved the Stony Brook-ELIH merger in May 2016 and the state health department granted its conditional approval for the merger in December. The state budget office and the state attorney general must approve the deal before the State Department of Health gives final approval.
“No firm date can be identified today,” Lauren Sheprow, Stony Brook University’s media relations officer said in an email Friday. Stony Brook is “working closely with New York State regulatory agencies to bring ELIH in as soon as possible,” she said.
That date can’t come soon enough for Connor, whose hospital is struggling to survive in a hostile business environment that makes it increasingly difficult for independent community hospitals to maintain viability.
Eastern Long Island Hospital finished 2016 more than $5.2 million in the red, according to its audited financial statements — more than three times its nearly $1.6 million operating deficit in 2015. The hospital’s unrestricted net assets fell from almost $3 million in 2015 to negative $1.87 million last year.
ELIH also failed its debt covenants in 2016, according to its financial statements. That resulted in more than $13.7 million in long-term obligations being reclassified as current liabilities. The hospital did not maintain a debt service reserve fund required by the bond covenants.
Connor said on Wednesday he is currently negotiating with the hospital’s bondholder to waive the covenants and is confident the bondholder will agree. He said the hospital has a bondholder teleconference scheduled Aug. 31.
“Five-and-a-half percent, triple tax-free — why would they want to cut that short?” Connor asked. He said the hospital would refinance its bond debt on the closing date with Stony Brook.
As of year-end the hospital also had $2.4 million outstanding on lines of credit with commercial banks that are expiring Aug. 30.
In the first six months of 2017, Eastern Long Island Hospital had an operating loss of $1.5 million, according to unaudited first-half financial statements posted online last week. That’s a significant improvement over the first half of 2016, when the hospital posted a $3.6 million operating loss. But the first-half statements showed the 90-bed hospital critically low on cash, reporting about $146,000 cash on hand as of June 30 — just one day’s supply.
The Greenport hospital’s 2016 audited financial statements were posted online last month on the Electronic Municipal Market Access website, which provides free public access to municipal securities disclosures and data. ELIH’s unaudited first-half statements were posted on the EMMA website Aug. 21. Crain’s Health Pulse, a subscription-only newsletter on the business of health care reported both the hospital’s 2016 year-end results and its first-half 2017 results.
Connor urged SoutholdLOCAL not to report on the hospital’s financial performance. He said last week he is concerned that a local news report on the hospital’s recent financial performance might jeopardize the hospital’s pending merger with Stony Brook.
“If this is printed locally, my phone will ring off the hook it’s going to raise a ruckus and that’s what I’m trying to avoid,” he said. It could become “political” and have negative “unforeseen consequences” to the hospital, Connor said.
Since the hospital’s performance has already been published — by Crain’s — and the hospital will disclose its 2016 results in its annual report, which is published each October, “there’s no news here,” Connor said.
“We have an obligation to basically to tell the community, because the community basically supports us financially, to tell the community what the performance is,” he acknowledged. The hospital will meet its disclosure obligation, he said. “I’d rather we’d use the typical process…I’d rather not have the newspaper highlight it. That’s not going to do any good.”
Connor also expressed concern that should the hospital’s financial performance “turns into a political issue” people might question why “the state is taking on this burden.” He pointed to the 2011 acquisition of financially troubled Long Island College Hospital by SUNY Downstate Medical Center. The state closed LICH in 2014. The SUNY Downstate/LICH deal cost the state hundreds of millions of dollars.
“I can’t account for that,” Connor said, “and I have to protect the hospital from that.”
It’s no surprise that independent community hospitals are struggling for survival. Twenty out of 21 Long Island hospitals have decided to affiliate with a larger system. Most recently, John T. Mather Memorial Hospital in Port Jefferson announced its intention to join the Northwell Health System, as Peconic Bay Medical Center in Riverhead did last year. Brookhaven Memorial Hospital in East Patchogue is now the only hospital on Long Island that has not decided to affiliate with a larger hospital network.
It is not clear whether ELIH’s recent financial performance will have any effect on the pending merger with Stony Brook. Stony Brook spokesperson Sheprow did not respond to question, submitted by email at the hospital’s request, asking whether ELIH’s 2016 results affect the viability of its merger into the Stony Brook system. A second email seeking an answer to the question went unanswered.
State Sen. Ken LaValle, champion of a Stony Brook-led health care system for Suffolk County, did not respond to requests for comment for this story, including specific questions emailed to his spokesperson at the aide’s request.
