The vitals of Interfaith Medical Center are not looking good. The hospital, which once boasted of 12 satellite care centers nearby; of serving more than half a quarter million patients every year; of taking its care to the streets and helping nearly 44 people every day with its Mobile Crisis Team; and of annual operating earnings that once reached $200 million, has been anything but boastful as of late. Try “broke.” Last week, the hospital’s lawyers filed for Chapter 11 bankruptcy protection.
“This filing will allow us to restructure our balance sheet, renegotiate some existing agreements and reposition the hospital for long-term viability, strength, success and growth,” said Luis A. Hernandez, president and CEO of Interfaith Medical Center.
Interfaith’s financial book has been severely in the red. Last year, the hospital sustained a $9.5 million operating loss. The year before that, it took on losses of $55 million.
“The reimbursements we’re getting per patient went down drastically,” Errol Rayson, a nurse at Interfaith, said in a televised interview. “And we don’t get any grants anymore from the state, so we are on our own.”
So too may be residents of the surrounding communities, at Crown Heights and Bedford-Stuyvesant. If Interfaith shuts its doors, it would be the second hospital in the area to do so, after St. Mary’s in 2007.
Interfaith is one of four remaining hospitals in Central Brooklyn. With just 287 beds, it’s one of the smallest, but Interfaith employs over 1,600 people, making it one of the largest employers in Bedford-Stuyvesant and Crown Heights. What’s more, no other hospital in New York City takes in as many poor patients.
Its focus on the poor has been a core of Interfaith’s mission since it began in 1983 as a privately held joint collaboration between Brooklyn Jewish Hospital and St. John’s Episcopal Hospital (the building Interfaith now occupies).
Though Interfaith hospital will not close anytime soon, due to the fact that Chapter 11 processes may take well over a year to conclude, the threat of closure still looms over it.
Officials at Interfaith say they need between $10 million to $30 million to keep threats of closure at bay. However, the threat of closure originated in Albany, and when the very state attacks you, which state agency can you run to for help?
“Unfortunately, our hospital was a victim of New York state’s drastic Medicaid reductions in 2010,” Hernandez said. “Because the people we serve are predominantly poor and fully 65 percent are dependent on Medicaid or Medicaid-managed care, we have had a unique deleterious financial challenge of being dependent on the state’s Medicaid reimbursements.”
Since the fall of last year, the hospital has sounded the horn of its cash-strapped status, making noise and sending S.O.S. letters to state officials and Gov. Andrew Cuomo’s office for help.
But to little avail. Interfaith’s largest creditor, the New York state agency known as the Dormitory Authority, could offer some relief, as owner to $130 million in loans. Yet, it reportedly won’t help unless preconditions are met. The Dormitory Authority is a state regulator of government financing. Cuomo, famous for his 2 percent across-the-board cuts, wants desperately to cut state expenditures, and has his eyes on Interfaith merging under the umbrella of the Brooklyn Hospital Center, nearby in Fort Greene.
The move would force Interfaith to shape up the way Brooklyn Hospital did when it went into bankruptcy. Yet, while the short-term goal may save the state from giving the up to $30 million directly to Interfaith, Brooklyn Hospital is set to receive that exact amount–$30 million–from the state to merge with Interfaith.
With Interfaith–seemingly a begrudged stepchild in the New York City hospital universe–facing over 12 months of continuous delinquency on its interest payments on its debt, and the debtor prescribing the solution of merger, it seems Interfaith has little choice but to merge or face bankruptcy and potentially dissolve as a hospital.
Since Interfaith serves a largely Caribbean-American and poor population, one can easily take a panoramic view of the fallout. From the vantage of community-level developments, news of Interfaith’s upheavals are the inevitable collateral damage that resulted from the recent efforts to dismantle and restructure Medicaid by upper-level legislatures in Albany and D.C.
Medicaid is the joint federal-state health insurance program for low-income men, women and children. Because of its purported propensity to bankrupt the nation, the future of this 45-year-old program remains uncertain, as debates over it roar in our nation’s capital and echo throughout the union, state by state.
With a mandate to absolutely balance budgets regardless of consequence, the New York State Legislature in 2010 decided to deal with the threat of the state hemorrhaging cash by decidedly reducing state Medicaid spending for New Yorkers bleeding for real.
Put Interfaith’s 65 percent dependence of Medicaid together with a promise to receive 40 percent less for most of its patients, and the picture becomes clear. Like pressing heavy elbows on a table with splintered legs, a crash is coming.
According to Melissa Krantz, spokeswoman for Interfaith, her boss Hernandez says it best.
“When someone asks you to give them a shoe that costs $25, then they give you only $12 for the shoe, what do you think is going to happen?”