NYAPRS Note: Another bailout for bankrupt Interfaith Medical Center in Brooklyn came on Monday from state coiffeurs and independent creditors. The money is contingent on transfer to a new operator by March 14, but reports from the meetings around the newest influx of cash only add to the confusion over the fate of the hospital. Media highlighted the terse words of Governor Cuomo last week in his budget address related to CMS’ stalling of the desperately needed 1115 waiver amendment funds that could save ailing hospitals like Interfaith. But the Governors’ and other state officials’ continuing frustration with the facility has left many wondering why the state continues to put millions of dollars into its survival, given the unwillingness of the hospital’s leadership to follow court orders or even basic best practices. The situation has become a local example of how politics can be played out through collateral interests.
State Offers Interfaith Medical Center Funding
Crain’s New York Business; Barbara Benson, 1/28/2014
A new agreement reached Monday between Interfaith Medical Center and its creditors gives the bankrupt Brooklyn hospital a $7.5 million cash infusion. But in a clear sign of the state regulators’ deep frustration with Interfaith’s board of trustees and management, the money is contingent on Interfaith transferring the control of the hospital to a new operator by March 14.
The Dormitory Authority of New York State, a major creditor of the hospital and the source of its lifeline debtor-in-possession financing, stipulated in bankruptcy court documents that Interfaith must “transfer control and operation of and full financial responsibility for all of its operating assets together with related real property and personal assets” to a temporary operator appointed by the state Department of Health.
The replacement of a New York hospital’s management with a state-appointed operator is a rare occurrence, a last resort after state health regulators’ negotiations with hospital executives fail. Most recently, DOH replaced the management of Peninsula Hospital, now closed, after shutting down Peninsula’s laboratory for dangerous conditions. The hospital’s assets are still overseen by a trustee appointed during Peninsula’s bankruptcy proceedings.
Interfaith’s agreement with DASNY at a court hearing on Monday calls for the hospital to get a loan of $17.4 million, including a previously-announced $4 million in vital access provider funding. The state awarded Interfaith an additional $12.9 million in money from the VAP program, a funding initiative reserved for safety-net providers. DASNY’s new loan agreement for Interfaith is $25.1 million.
On Jan. 17, Interfaith diverted ambulances for several hours to conserve its cash on hand. The move came one day after DASNY told the hospital that it was in default of its debtor-in-possession financing agreement with the state. The agency lashed out at Interfaith in court documents, accusing the hospital of behaving in a way that led the state to cut off funding.
The hospital’s “refusal to cooperate” with DOH and DASNY “not only contravenes applicable court orders and the law,” but keeps and DASNY from providing needed capital” to Interfaith, according to state documents filed on Jan. 16.
http://www.crainsnewyork.com/article/20140128/HEALTH_CARE/140129882?template=print