In a move that has received a large amount of praise but some criticism, the Nassau County Legislature, last week, unanimously approved the sale of the Nassau County Medical Center, located in East Meadow, to a Public benefits Corporation for $82 million. This sale also includes the adjacent A. Holly Patterson Nursing Home, 50 acres of land surrounding the hospital, and seven health clinics across the county.

In February 1998 the legislature met to discuss passing the hospital, which is owned by the county, on to a public benefits corporation (PBC). In the following months, which turned into nearly two years, the legislature discussed many different figures for the sale, from $1 to $106 million to $53 million, before finally settling on $82 million.

When the legislature decided to release the hospital they asked the state legislature to set up a public benefits corporation, which became the purchasing entity. The bill, setting up this corporation, was sponsored by New York State Senator Kemp Hannon, chairman of the Senate Health Committee, who explained that their role was to pass a statute. He added, "That's what a public benefits corporation is, namely a separate entity with rules and regulations. There's a governing board. You provide for the establishment of the governing board and how the original people and the successors will be appointed and then you provide for the powers and the duties of the corporation and how it shall exercise those powers and duties." The bill passed through the senate and assembly before being signed into law by the governor.

Following the establishment of this statute, the legislature then began working out the details of the sale itself, before reaching a final settlement in the early morning hours on Aug. 31.

"I think that the only way to ensure the viability of the medical center was to do this transaction. According to the experts that testified in our hearings, according to our own consultants the only choice we had was to transfer this medical center from a county-owned facility to a public benefits corporation in order to be able to compete in the changing health care environment that we currently see," said Bruce Blakeman, majority leader and presiding officer of the Nassau County Legislature.

The concerns for the viability of the hospital, if it was left under county ownership, stems from the regulations governing anything run by a municipality. The hospital was having trouble keeping up in the ever-changing and progressing medical field because they had to follow county procedures. Any purchases or hirings had to be approved by the county before they could be followed through on, sometimes causing a delay of many months. The legislature feared that this wait would cause problems for the hospital, in a time when so many single hospitals are failing. Many of the hospitals around the county have merged with other hospitals to create a stronger alliance. Under county ownership the NCMC did not have the advantages that these merged hospitals do.

Hannon stated, "The thought was, that for the long-term survival of this as a hospital, that you'd really need to release it from the statutes that govern municipalities and allow it to operate a little bit more on a practical, private business scale rather than under municipal laws."

Under the agreement, which crossed partisan lines, the PBC will sell bonds guaranteed by the county to raise the money for the sale, $82 million of this will go to the county, with $135 million going to the corporation for working capital and $26 million going into a reserve fund; the county will contribute $22.5 million for renovations and capital improvements needed by the hospital; the county will provide support in the form of subsidies for the hospital as follows: $18 million the first five years, $18.5 million the sixth year, and $16 million in the seventh year. This money will provide health care for the indigent. After year seven the amount the county must subsidize will be negotiated; the PBC will be responsible for paying off the bond debt with its revenues generated by the corporation; should the PBC participate in a joint venture with another hospital, money generated from this subsidiary must be used to pay off its bond debt. These revenues can't be diverted; New York State Comptroller can audit the PBC once a year and the PBC must also hire an outside auditor once a year and these reports must be made available to the public. The PBC must report to the legislature annually.

The PBC will be known as the Nassau Health Care Corporation, thus changing the name of the hospital from NCMC to NHCC.

Nassau County Legislator Judy Jacobs, minority leader, said, "I am confident that this sale is in the best interest of the county and its residents. The new Nassau Health Care Corp. will be more flexible, adaptable, efficient and effective in this rapidly changing health care environment, while still providing quality care to the poor."

The care to the poor was an issue that had members of the Legislature sticking firm. By providing a yearly subsidy to the PBC, the Legislature has ensured that the PBC will continue with the mission of the hospital and provide quality care for the poor, uninsured and underinsured.

It is this that Legislator Dennis Dunne, legislator for the district in which the hospital falls, said would have had him voting against the sale. "If they change that mission, it doesn't have my vote," stated Dunne.

Despite the subsidy and the other promised funding, the Legislature feels that the county is doing very well with the sale. The $82 million will help the county diminish the $300 million deficit. According to Blakeman, "Our costs are fixed contractually, at $18 million a year for the next six years so we know what it's going to cost us for at least the next six years and it makes it a lot easier for us to budget for this expense and also we're fixing our costs in an environment that is constantly having cost increases so we feel that it's a good deal for the taxpayers and a good deal for the public at large." Prior to the sale, the operation of the hospital cost the county, over the last few years, an annual amount of $15-35 million but the legislature had projections that those costs could go up as high as $50-75 million in the next couple of years. Jacobs stated, "Of course if this county was very solvent, and in the black, the best sale to a PBC is for $1 and you don't burden them with debt from the very beginning, but obviously part of the motivation here was a quick influx of $82 million."

Despite the Legislature's positive attitude about the effect that this sale will have on the county finances, not all the reports about the fiscal responsibility of this action have been positive. In a memo sent to Nassau County Executive Thomas Gulotta, Blakeman, Jacobs, and all the members of the Legislature, on Aug. 24, Nassau County Comptroller Frederick Parola stated, "The transfer of the Nassau County Medical Center, the A. Holly Patterson Geriatric Center, the various health clinics and certain other health care assets to a PBC or some other health care entity is imperative. However, an in-depth examination of the current proposed agreement clearly indicates that the county is realizing an immediate infusion of cash to meet the current operating shortfalls in exchange for significant long-term obligations and liabilities. Specifically, the one time influx of $82 million nets to a negative $75 million by the end of the year 2001."

Some of the problems that Parola outlined in the memo were the abundance of outgoing costs such as the subsidy and the money for capital improvements. In the memo, Parola also notes that the county is currently receiving federal funding for operating the hospital, which will be lost. The memo goes on to say, "While the county will provide services to the PBC at no cost, the PBC will provide medical care for the Correctional Center at a 21 percent profit. Increased costs to the county in this area are estimated to be $3.4 million a year." A cost summary in the memo states, "The total increase in annual obligations (costs, lost revenues, etc.) to Nassau County is estimated to be between $65-70 million per year, commencing in 2000 (does not include one-time revenue transfer of $82 million and does not factor in subsidies to the hospital and the geriatric center in lieu of these additional costs)." The memo goes on to outline other areas of concern and urges the county executive and Legislature to carefully consider the concerns and how they will be addressed in the 2000 budget.

Despite these concerns, members of the Legislature feel that this agreement with the PBC is in the best interest of all concerned. Dunne also outlined how beneficial the sale was for his own legislative district in that if the hospital failed, it would be extremely difficult to fill that huge building with anything other than the hospital, which would hurt the county, but most especially the 15th L.D. He also believes that the plans that NHCC has for the hospital will only make the care, services and appearance of the hospital better. "They're going to dress it up so it's great for the 15th L.D. because they're even going to do some cosmetic surgery on it. They are going to try to make it attractive enough to bring in people who are very well insured. It's going to be a state-of-the-art facility hopefully. I have a really, really good feeling about it and I'm happy to have been a part of the whole transaction," concluded Dunne.

Eric Rosenblum, who will be chairman of the board for the Nassau Health Care Corp, stated the sale was, "a relief. It's been a long process and I think that we can now get on with the business of health care."