HealthAlliance CEO David Lundquist. (Photo by Dan Barton)

HealthAlliance of the Hudson Valley, Ulster County’s largest employer with 1,600 full-time and 600 part-time employees, is preparing for downsizing. According to a press release issued last Friday afternoon, financial challenges are causing the health care organization to evaluate options to reduce expenses and improve efficiency, “including actively pursuing a single-campus alternative in Kingston.” According to HealthAlliance CEO David Lundquist, management has been seriously examining “different operational considerations” for about a year.

Lundquist emphasized that HealthAlliance hasn’t yet come to a final decision as to what to do. “We’re looking at all the options,” he said Monday, May 7. “We don’t know what the final thing will look like. It starts with the plan, and with engaging the community.”

His was not “a doomsday message,” he said. With all the recent changes in the structure of health care and because of the nation’s continuing economic problems, major structural accommodation at HealthAlliance was necessary and inevitable. “It’s wrong to ignore it,” Lundquist said. “We have to change.” In the teeth of the recession, HealthAlliance lost several million dollars last year.

Kingston Mayor Shayne Gallo said Tuesday he was so concerned about the possibility of losing one of the hospitals that he had instructed members of a new volunteer business advisory task force to make working with hospital officials to avert a shutdown a top priority. Gallo said the council was already compiling demographic and economic data to support the inclusion of the Kingston hospitals in the New York City Metropolitan Statistical Area, a move which would increase HealthAlliance’s Medicaid reimbursement rates, as well as to highlight the economic cost of losing one of the facilities.

The Metropolitan Statistical Area determines reimbursement rates under the federally funded Medicare program. The system is designed to account for regional variations in the cost of living and doing business. The MSAs are assigned by the U.S. Department of Health and Human Services, but observers have long complained that the system has been widely politicized. While Orange and Dutchess counties have won inclusion into the New York City MSA, Kingston remains in its own, lower-paying reimbursement zone. The exclusion, hospital officials argue, has resulted in the Kingston hospitals losing out on $10 million a year in federal reimbursements. The disparity also places Kingston at the edge of a “wage cliff” — without the higher reimbursement rate, proponents say, the hospitals cannot compete with their better-funded counterparts across the river for skilled medical staff.

Gallo added that he had assigned Gregg Swanzey, the city’s economic development director, to investigate potential grant or foundation funding for the cash-strapped hospitals.

“It would have a devastating impact,” said Gallo of the looming closure of one of the hospitals. “We’re not just talking about city and county sales tax, we’re talking about quality of life.”

Gallo reiterated HealthAlliance officials’ oft-stated contention that exclusion from the higher-paying MSA cost the company $10 million a year and said that it would take forceful action by New York’s delegation to the U.S. Senate to reverse the spiral.

“We have to lobby and make our voices heard,” said Gallo. “The U.S Senate is our only hope. Senator [Charles] Schumer has to take center stage, so does [U.S. Sen. Kerstin] Gillibrand.”

So much for cooperation

Assemblyman Kevin Cahill, D-Kingston, who was instrumental in securing some $47 million from the state to effect the merger of Kingston and Benedictine hospitals, said closing one of the hospitals would be a “disaster.”

“The merger of these two hospitals, different cultures, really, was held up as example as a cooperative community effort,” Cahill said. “A few years later, after almost a $50 million state investment, they’re saying it doesn’t work?”

Cahill said the public needs a careful detailing of how the merger money was spent and of definitive plans going forward. “This should be a transparent process with community input. These decisions should not be made by a faceless board of directors,” he said.

Meanwhile, the president of the Northern Metropolitan Hospital Association called the HealthAlliance’s decision to consider closing a hospital “courageous.”

Featured image: Benedictine Hospital. (Photo by Dan Barton)