“Follow the money,” says Dr. John Romanelli.
Romanelli was the final president of the medical staff at Long Island College Hospital (LICH) before the merger with the State University of New York Downstate (SUNY). He has been a doctor with LICH for more than 30 years. His entire family has been treated at LICH. And like so many others, he is concerned about the future of his hospital.
LICH originally sought a suitor in the late 1990’s to prevent their hospital from accruing massive debt. Ironically, once under Continuum Health Partner’s leadership, money began leaking through the cracks of the 155 year old hospital. Between the stripping of their real estate assets and eradicating endowments, LICH has watched much of their value slip away. The lack of resources, funding and attention by their governing partners over the past 15 years has left LICH vulnerable to a potential shutdown. But the communities that rely on this hospital have fought for – and averted – the closure, at least for now.
Last week on Wednesday, April 24, the NY City Council Health Committee voted unanimously to support a resolution presented by Councilmen Brad Lander (D-39) and Stephen Levin (D-33).
In his opening remarks, Lander commented that “We’re not insisting that SUNY Downstate continue to operate LICH. They’ve made it clear that that doesn’t work for them.”
Levin followed by saying that SUNY has not “shown any interest in operating [LICH] successfully,” but “that should not overshadow the vital need for healthcare services in the Cobble Hill/Brooklyn Heights area.”
On Thursday the following afternoon around 3 pm, the full NY City Council approved the resolution with a second unanimous vote. The bill called on SUNY and the Department of Health (DOH) “to work with stakeholders to pursue the acquisition of Long Island College Hospital (LICH) by another health care institution to preserve critical health care services for the community.”
On Friday April 26, SUNY formally withdrew their proposed closure plan from DOH. In the news release from Ronald Najman, SUNY also plans to “continue to seek a provider of healthcare services within the LICH community, including potentially a hospital operator.” Immediately upon the withdrawal were cheers of victory among LICH’s supporters and employees.
Lander publically joked at a meeting the following week that “never has a city resolution produced results so quickly.”
However, there still remain serious cries of concern for the ailing Brooklyn hospital. Considering SUNY’s sordid past decisions, the apprehension is well deserved. Dr. Daniel Ricciardi commented, “Continuum has definitely raped and pillaged us; SUNY just neglected us.” Dr. Ricciardi, a rheumatology specialist through LICH, has lived in Brooklyn Heights since 1980. He began his residency at LICH in 1977.
SUNY sparked a recent controversy over LICH real estate. The deception is one of several examples SUNY has exhibited since their takeover of LICH in two years ago. However, selling off the valuable Cobble Hill properties first began with Continuum.
In June 2008, the New York Times (NYT) published an article entitled “Doctors Say Hospital is Falling Victim to Its Own Real Estate Value.” Nearly five years ago, LICH Continuum Health Partners recognized the value of the property and had sold off three of the campuses buildings for a total of more than $33 million. In previous years they sold a number LICH properties, including several brownstones along Atlantic Avenue and St. Peter’s Church and School on Hicks Street for a total of $16 million.
Most notably of these buildings was the former International Longshoreman Association’s (ILA) Medical Center at 340 Court Street. Dr. Romanelli and several of his colleagues put out a bid for the building. About 30 doctors planned to open clinics and private practices associated with LICH. Continuum discovered their plan, outbid the doctors and bought it themselves for nearly $8 million. A few short months later, Continuum flipped the property for $24 million.
The article also noted that “Stanley Brezenoff, president of Continuum, said in an interview Monday [June 9, 2008] that the system is, indeed, trying to cash in on the real estate,” to keep LICH from “the brink of bankruptcy. ‘We do the liquidation of assets in order to give them money to operate,’ [he said.]”
Initially, hospital employees were told that the money would be used as a $5 million investment for the development of primary care. But that never happened.
Berezenoff maintained that the money went towards the hospital’s deficit. Dr. Daniel Ricciardi, who was initially on LICH’s Board of Trustees when they merged with Continuum’s board, explained that Continuum was charging their five hospitals equally for all services, “even if we didn’t get services.” Smaller hospitals – like LICH – were expected to pay the same as larger hospitals for billing and executive salaries.
After being sold by Continuum, the Court Street location was immediately demolished and is still being developed into luxury condos.
Under Brezenoff’s management, Continuum had a prior history of selling property of other hospitals under their jurisdiction. A Beth Israel building was sold for $180 million to a condominium developer. Property at St. Luke’s-Roosevelt Hospital Center was also sold to the same developer.
In the NYT article Brezenoff noted that St. Vincent’s Hospital in Manhattan – still operating at the time – would close if permission was not granted to sell off some of the landmarked property for redevelopment. “ ‘What’s St. Vincent’s, except a real estate strategy?’ ” he said.
Past president, Dr. Arnold Licht and current president, Dr. Toomas Sorra of LICH’s medical staff responded to the article with a letter to the editor. They wrote, “The short-term response to a long-term problem underscores our concerns about why LICH’s finances are still so troubled after 10 years under Continuum management.”
Five years later, property values have soared and the city’s population has hit an all time high at 8,336,697. While all five boroughs registered a larger influx in 2012, Brooklyn registered the highest percentage with a 2.4% increase. Brooklyn’s population grew by almost 61,000 last year – nearly twice the number of people accounted for in Manhattan, where the population grew by 33,200 (2.1%).
In March of 2013, The Real Deal: New York City Real Estate News published an article entitled “Brooklyn’s Building Bonanza,” sighting a number of real estate developments “slated for Brooklyn and Queens – with a strong emphasis on Brooklyn.” The article continues, “The flood of new inventory will be concentrated predominantly in Downtown Brooklyn” – very near to LICH.
The Real Deal cites many developments throughout Downtown Brooklyn including a 720 unit rental on Schermerhorn Street, a 200,000 square foot residential building on Smith Street, a 74 unit rental on Clinton Street in Brooklyn Heights that sold for $50.8 million, a 440 unit rental on Flatbush Extension, a 90,000 square foot residential building on Bergen Street in Boerum Hill and Lightstone’s 700 unit rental along the Gowanus Canal.
“The Brooklyn projects tend to be substantially bigger than what’s being built in Manhattan,” because of the rezoning of Downtown Brooklyn in 2004. “In the wake of the rezoning, developers gobbled up prime sites in the neighborhood quickly and, in many cases, cobbled together lots that can accommodate hundreds of residential units,” reported The Real Deal.
On Tuesday, March 26, 2013, the Daily News printed an article, “Prospect of Redeveloping Waterfront Long Island College Hospital Site in Cobble Hill Has Developers Licking Their Chops.” The opening line reads, “Exit the doctors – enter the developers.” The article estimates the total property value of LICH to be upward of $1 billion as “real estate pros are salivating over the possibilities.”
While developers are looking for new properties and SUNY remains in dire financial straits, closing the hospital for capital gain would allow the state institution to pay off massive cash shortages as well as continue on with their plan of opening a for-profit hospital elsewhere in Brooklyn – when the state budget eventually allows it.
“Worse, [SUNY] hospital officials deceived the public, originally saying the closure had nothing to do with the prime real estate on which it sits – only to later admit the value of the land was a consideration,” the Daily News confirms.
When taken all into account, one might find it very easy to determine the merger between SUNY and LICH was originally meant to be a real estate deal. Smaller buildings sold by Continuum gained a huge profit. Very few – if any – services SUNY promised have been fulfilled.
The SUNY Deficit
Appearances suggest that SUNY never created a long-term sustainability plan for LICH. The State Comptrollers audits for the past two years verify that no proposal was ever executed. Dr. Romanelli commented that the only contribution to LICH were the two “tombstones” – the signs marking SUNY’s claim in front of the hospital.
Nurse Practitioner and staff nurse of Psychiatry for the past 13 years, Hardy Hill said, “It makes me wonder if [SUNY] knew exactly what they were doing in the beginning – which is take the institution [LICH] and flip it, like you do in real estate.”
Despite the financial mismanagement by Continuum for more than a decade, SUNY agreed to allow Continuum to continue LICH’s patient billing through 2016 – a service for which LICH is continuing to pay $4 million each month. Doctors and hospital staff at LICH report a consistent lack of billing to insurance companies. Millions of dollars are being lost every year because Continuum gets paid to do the billing whether the billing is done or not. Assemblywoman Joan Millman joked ironically at a recent meeting, “It’s a good time to come here [LICH]; they don’t charge.”
Greenburg said that the billing is still being done by Continuum because it was “just part of the deal when the purchase was made.” Others emphasize that it was impossible for SUNY to take over LICH’s billing because they did not have the proper systems in place, but were supposed to be working towards taking over the process when the deal with Continuum expires in 2016.
Thus far, SUNY’s financial plan has never been released to the public, the state, DOH or even the Comptroller’s Office for annual audits. Greenburg reiterated SUNY’s position that their financial information is available online and they would be happy to fully open their books to any prospective buyer. However, all of the requests from LICH to share crucial information on the actual financial standings were denied – until the pending lawsuit required SUNY to release the documents.
SUNY’s own financial woes, before and during the merger, only became evident in the public eye in 2012 when State Comptroller, Thomas P. DiNapoli released a report entitled “Audit Reveals Alleged Procurement Improprieties at SUNY Downstate Medical Center.” After receiving three anonymous letters of alleged fraud, investigators and auditors “found efforts to circumvent the bidding process with fake bids, improper relationships between staff and vendors, and problems with software implementation.”
DiNapoli stated, “The systematic breakdown in oversight found at SUNY Downstate Medical Center allowed for questionable practices that may have undermined the integrity of the purchasing process and raises concerns about the best price was obtained. Officials must take action to change how business is done and put necessary safeguards in place to protect public dollars from this kind of fraud and abuse.”
In both the 2011 and 2012 audits, the state comptroller’s findings show that SUNY was not financially capable of taking over and maintaining LICH. SUNY estimates that LICH is losing the exact amount each month that is being paid to Continuum for billing – or lack thereof. If proper billing was being implemented, evidence suggests that LICH would be a profitable hospital.
In regards to the 2012 findings by DiNapoli’s audit the following year, SUNY Chancellor Nancy L. Zimpher released a statement on January 17, 2013, saying, “Many of the Comptroller’s findings – none of which we dispute or consider to be a surprise – are issues already being remediated or currently being addressed.” SUNY then immediately took action against LICH who incorrectly bore the blame for SUNY’s deficit. Twenty two days later, SUNY’s Board of Trustees voted unanimously to end all services at LICH.
The Othmer Endowment Fund
Donald and Mildred Othmer were both in their nineties when they passed away in the late 1990’s. They had gained a large fortune by investing in Berkshire Hathaway with Warren Buffet. They had no children and at the time of their passing, the Othmer Estate was worth three-quarters of a billion dollars.
Mr. Othmer was an inventor and consultant who at one time sat on the Board of Trustees at LICH. Mrs. Othmer was a former school teacher who volunteered at Brooklyn Botanic Gardens and Planned Parenthood. They were also both life-long patients of LICH.
In their will, they left a combined sum of approximately $136 million to their beloved hospital. When Mr. Othmer’s will was finalized in 1996, $26,956,800 was given to LICH. Mrs. Othmer’s will granted the hospital $109,344,000 after her death in 1998.
The wills set very strict parameters on what was to be done with the money. The hospital was to use only the dividends off of the money each year unless “LICH finds itself on the brink of bankruptcy. If the hospital is forced to close, the intent and purpose of Donald’s and Mildred’s gift to it will become impossible or impracticable to achieve,” the will reads. In 1999, the endowment gained approximately $10 million in dividends.
Both wills also contained restrictions against a beneficiary that does “not qualify as tax exempt under the pertinent Federal tax laws” in which “the undistributed amounts shall be instead distributed to the existing and qualifying charities.”
In addition, LICH was eligible to receive an additional $5 million from the Othmer Estate if a cancer center was created. Continuum bought the ILA building at 340 Court Street – after outbidding the doctors for the property – saying the building would be used for the new cancer center. The facility was to be called the Donald F. and Mildred Topp Othmer building, as dictated in Mrs. Othmer’s will.
On May 30, 2000, King’s County Surrogate’s Court issued a cy pres – or a “doctrine, applied especially to cases of charitable trusts or donations, that, in place of an impossible or illegal condition, limitation, or object, allows the nearest practicable one to be substituted,” according to dictionary.com.
Under the Continuum administration, “already maximized [at] its debt capacity, LICH now petitions the court to exercise its cy pres powers” to “compete successfully and survive economically in the changing health care environment.”
Because LICH was their entity, Continuum controlled the money as a non tax exempt operator. A portion – $30-40 million – was used to make improvements in the hospital, mainly repainting and replacing tile. The Court Street building never materialized and was sold off in 2008.The $5 million, which had been collected in 2002, was never returned to the endowment fund.
From there all traces of the Othmer monies disappear. The remaining $100+ million was absorbed into Continuum’s general pool of funds.
Many of LICH’s doctors, nurses and technicians are hopeful that at least a portion of the money still exists. Some believe that Continuum borrowed the money under terms of a loan. Others expressed concern that after the merger with SUNY, Continuum is no longer liable for the repayment terms. However, one thing is certain. LICH is no longer receiving their yearly dividends.
On April 1, New York State Nurses Association (NYSNA), the Concerned Physicians of LICH, and Service Employees International Union (SEIU) Local 1199 filed a lawsuit against SUNY and DOH as an “order to show cause for declaratory Action and Article 78 proceeding.”
Under the conditions of the lawsuit, SUNY was required to provide previously unreleased financial documentation to LICH and the unions one day prior to the court date. Those documents were received exactly one day before the intended court hearing on May 1.
Judge Johnny Lee Baynes granted the second temporary restraining order (TRO) prohibiting SUNY from taking “any action in furtherance of the closure plan” until the originally scheduled hearing on May 2, 2013. The court date was later postponed until May 29, 2013.
Despite court orders, SUNY was already taking steps toward the imminent death of LICH.
On April 6, the Daily News published an article entitled “The State of Long Island College Hospital is outrageous, showing complete contempt for Brooklynites.” It begins, “[LICH] is in critical condition.” In an email provided by Dr. Romanelli to the writer, Denis Hamill, a resident doctor writes, ” ‘The hospital is running out of supplies. Today I wanted to measure one patient’s temperature prior to discharge, but there were no thermometer probe covers available. After searching, a nurse manager found one box on the entire floor. But how long will that last? One shift?’ ”
Also in the article, Dr. Romanelli says, ” ‘When doctors don’t have the ability to schedule surgeries, when a child is unable to receive pediatric treatment, when patients are fed tuna sandwiches like prisoners in Central Booking, this is not a hospital. This is criminal. People who don’t need to die might die at LICH because of these abusive conditions.’ ”
The article continues to report all around shortages that were crippling the hospital, leaving it inadequate to provide many services. “The state of LICH is outrageous, showing contempt for the people of this part of Brooklyn. It might also be contempt of court,” Hamill writes – suggesting that SUNY’s inaction may be considered action towards closure in the May 29 hearing.
Twenty computers intended and badly needed for LICH were sent directly to SUNY’s campuses. Former lobbyist and current SUNY spokesperson Steve Greenburg explains that LICH is a part of SUNY Downstate and that “anything that is part of LICH belongs to SUNY.”
In December, SUNY’s president, John Williams approved the purchase of a $2.5 million da Vinci Surgical Robot. The robot is designed to assist with surgical procedures, eliminating the possibility of human error. Data is input into the machine and the robot makes precision cuts based on the information given. It can assist in most surgeries, but is most beneficial in prostate surgeries. After the original closure vote on February 8, the robot was taken out of LICH to SUNY Downstate.
SUNY also reportedly purchased at least three brand new ambulances – for SUNY – just weeks before the decision to close LICH was announced, even though SUNY claims to not be financially capable of operating LICH.
In a show of bad faith, WARN notices – or letters of termination were postmarked March 19, the same day of SUNY’s second vote to shut down LICH. The letters would have to have been prepared for mailing in advance of the vote. Greenburg confirmed that as of April 20, the letters were still valid, effective June 18.
Surgical teams at LICH were told by SUNY not to schedule any surgeries, including Caesarian sections after April 30, 2012. The date fell two days before the original court date on May 2, despite court orders that SUNY could not take actions to discontinue any services at LICH.
At the City Council Hearing on April 24, Hill spoke of the condition of his ward. Over the past two years, the psychiatry unit has consistently held 41-43 patients. When he left for the hearing, the ward held 3 patients. He said that by the time he would arrive for his next shift, all three of those patients were scheduled to either be discharged or transferred to another hospital. Hill appealed to the City Council of Health by saying, “You don’t beat up on those who can’t help themselves.”
Dr. Marwan Attilah later confirmed this fact in a phone interview with the Star-Revue. In fact, the psychiatric unit was forced to close Thursday night, April 25 after all three of the doctors relocated to different hospitals. In lieu of their decision to withdraw their foreclosure plan the following day, SUNY quickly hired on a psychiatric doctor and reopened the ward Friday morning, April 26.
Request for Information
On May 1, 2013, SUNY formally issued a Request for Information (RFI) from “qualified parties who could provide health care services [… ] at or around” LICH. The RFI states, “State University of New York (SUNY) on behalf of its Downstate Medical Center is requesting expressions of interest from qualified parties who could provide health care services, including operation of an acute care hospital, at or around the Long Island College Hospital (LICH) site in Brooklyn.”
The RFI continues, “SUNY and certain entities related to SUNY collectively acquired the LICH healthcare services operation from Continuum Health Partners (CHP) in 2011. SUNY has operated LICH with significant annual deficits, and therefore, wishes to divest itself from the LICH operations.”
After being highly publicized in the media, the RFI was long-awaited and welcomed. But upon in-depth scrutiny, the request, “has instead produced further confusion about their motives,” according to Dr. Toomas Sorra, President of Concerned Physicians of LICH.
From a post on their website posted with the RFI on May 1, 2013, SUNY writes, “It is clear that Downstate needs a critical restructuring that will allow it to continue serving the community.” Five reasons for the “fiscal crisis and four “actions” taken by SUNY System Administration are listed in the post, none of which mention LICH.
Dr. Sorra says that the unions will proceed with their lawsuit despite SUNY’s withdrawal of closure from DOH. “SUNY thought by withdrawing this plan, they would get us all to shut up,” he said. “But we demand to be a full service hospital.”
Dr. Sorra calls the RFI a “charade, while Jerry Armer exclaims, “This one has more holes than Swiss cheese from Switzerland. They’re still out to kill Long Island College Hospital.”
The timeline that SUNY has laid out is extremely brief. The deadline for the RFI is May 22, 2013, merely three weeks after the RFI was issued. In addition, the time allotted to submit questions ends at 3 pm on May 15, only two weeks after the request was issued. Seven days later, all requests are due, giving prospective buyers one week to receive a response from SUNY and issue a formal proposal.
The request offers an explanation for their brief timeline. “The information received in this Request for Information (RFI) may be used in the development by SUNY of a plan to achieve fiscal viability of the Downstate Medical Center (the Sustainability Plan). SUNY is required to submit a sustainability plan to DOH and the New York Office of Budget by June 1, 2013 and begin its implementation on June 15, 2013.”
In addition to a limited timeline, the RFI also restricts access to the hospital. “There may be limited opportunities to tour the LICH campus upon request from the respondents. Tours will not include any areas of direct patient care.”
In response to some of the discrepancies, Jeff Strabone, Minister of Information and Cobble Hill Association Officer, discloses that “maybe this process is meant to fail.”
The RFI also points out that although LICH was merged with SUNY, the hospital retains every asset belonging to LICH. “All real estate and property, fixtures, plant and equipment at the LICH campus are held by Downstate at LICH Holding Company, Inc. (DLHC), a New York not-for-profit corporation of which SUNY is the sole member.”
Despite the obstacles, this is significant progress for LICH. Cobble Hill Association (CHA) president, Roy Sloane said, “While this is an important victory and a critical first step – we have not yet won the war.
Strabone reaffirms this message of caution. “Are we out of the woods yet? No. There’s a lot that can still go wrong.” LICH still needs a new operator. But they will need SUNY’s cooperation.
In the interim at the CHA Spring 2013 General Meeting, Sloane “direct[ed] a few words” to SUNY:
“You know we are not happy.
“You talked about community, but you Pearl Harbored us in a surprise attack on our communities without even a word of warning – even as we tried to help you.
“You never engaged the community; you did not live up to your promises.
“You know you were not honest with us. You made no investment, developed no plans and did no outreach. You broke faith with the people you were supposed to serve, and then you tried to take the money and run.
“Our hospital does not ‘belong’ to you. LICH is the product of 150 years of philanthropy, volunteerism and commitment. You have only been holding it in trust. I regret to say that you did not prove worthy of that trust.
“But even with those harsh words said, we are still willing to work with you. Trust can be rebuilt and confidence can be restored, but only if you are willing to engage all of us in the LICH community…
“…This could be your proudest moment – or you’re most shameful. Reach out to us now. It is late, but not too late. Remember if you fail, you’re epitaph will read, ‘Here we lie because we refused to engage the community.’ ”
LICH’s death sentence has received a stay of execution. The 460,000 residents in the surrounding communities will still have access to their much-needed medical facility. Activists remain committed to see LICH rebuild and flourish.
However, there is still a lot of hard work and many obstacles ahead. LICH must become viable again quickly – before SUNY has another chance to pull the plug.