News From our Members

Paterson Gives St. Vincent’s Hospital Another Loan

By Anemona Hartocollis

Gov. David A. Paterson provided the second cash infusion in a week Sunday to St. Vincent’s Hospital Manhattan in Greenwich Village, but said concessions from unions and physicians would be needed to keep the hospital open.

The governor said Sunday that after “hours of intensive discussions and calls between all parties” the state had agreed to put up $3 million and creditors another $3 million to keep the hospital going temporarily.

It was not clear how long the cash would last, and Mr. Paterson challenged other stakeholders to help as well.

The 160-year-old hospital is $700 million in debt and has stopped accepting new outpatients to its well-known H.I.V. and community health programs because it may be forced to close.

The governor said in a statement that saving St. Vincent’s would require “shared sacrifice,” adding: “We believe this assistance, if combined with assistance from the sponsors, concessions from the unions, management and physicians, cost-cutting actions and aggressive cash management will allow St. Vincent’s Medical Center the time needed to develop short-term and long-term plans for the future.”

The loan came on the heels of an $8 million loan from the state and the hospital’s main creditors, GE Capital and TD Bank, that was announced last Tuesday. The first loan was used for payroll and supplies and was exhausted almost immediately, in part because vendors are now demanding cash in advance or on delivery, hospital officials said.

City Council Speaker Christine C. Quinn, state and federal elected officials, and union leaders have become part of a group working with the governor and the state health department to save the hospital.

But so far, neither the city, the federal government nor the unions have proposed to contribute to the state’s efforts to keep the hospital going until a more permanent solution can be found. A spokeswoman for the hospital workers’ union, Local 1199 of the S.E.I.U., declined to comment Sunday evening.

As a political matter, wage concessions are sometimes more damaging to unions than layoffs, because laid-off workers do not vote in union elections while those whose salaries have been cut do.

Mayor Michael R. Bloomberg has taken a neutral, almost philosophical approach to the hospital’s plight. On Friday, he said in his weekly radio program that he doubted the hospital could stay open longer than six months, but he did not offer any help.

“People want to keep it open; that would be great if you could find a way to do it,” Mr. Bloomberg said. “I will say I find it hard to see how you can do that. You might be able to get it through another six months or something. The governor’s giving them a loan to pay their employees for another month, but unless you can really come up with a business model that works, which is difficult in the best of times for the best of hospitals, it’s a really tough proposition to come up with.”

Hospital Network Withdraws Proposal to Take Over St. Vincent’s

By Anemona Hartocollis

A large hospital network that had offered to take over the nearly bankrupt St. Vincent’s Hospital Manhattan in Greenwich Village has formally withdrawn its offer, further clouding the hospital’s prospects for survival.

Stan Brezenoff, president of Continuum Health Partners, a consortium of five hospitals in Manhattan and Brooklyn, said in a letter to Henry J. Amoroso, the president and chief executive of St. Vincent’s, that he was withdrawing the offer because of what he said had been a negative reaction to it from both the State Health Department and St. Vincent’s own board. The letter was sent last Friday but not released until Thursday. But Mr. Brezenoff left open the possibility that St. Vincent’s could return to talks with Continuum.

The uncertainty over St. Vincent’s future has led some doctors — especially star doctors — to begin making plans beyond their affiliation with St. Vincent’s. Several St. Vincent’s physicians have approached Continuum about securing admitting privileges at its hospitals, which would give them the right to work in those hospitals, Jim Mandler, a spokesman for the network, confirmed Thursday. Mr. Mandler said Continuum was talking to those doctors, “because we are very much aware of the recruitment efforts of other hospitals for these physicians.”

In its offer submitted to St. Vincent’s on Jan. 22, Continuum proposed to continue running outpatient facilities for the hospital, on 12th Street and Seventh Avenue, while funneling those who need inpatient care to its own hospitals, St. Luke’s Roosevelt on West 58th Street and Beth Israel, across town on the East Side. Most emergency room and inpatient services would have been eliminated.

St. Vincent’s, the last remaining Catholic general hospital in New York City, is $700 million in debt and needed a state loan this week to make its payroll.

The Continuum plan created an immediate uproar at St. Vincent’s and among local politicians, who said the neighborhood could not be without an emergency room or inpatient services and who accused Continuum of being more interested in shutting down competition and improving its own finances than in saving neighborhood health care.

In his letter, Mr. Brezenoff expressed pique that St. Vincent’s was considering looking for other offers, hinting that he believed that this would turn Continuum’s offer into a bargaining chip. He made it clear that his offer had been a take-it-or-leave-it one.

“On reflection,” Mr. Brezenoff said, “I feel constrained to take the formal step of withdrawing the proposal that we sent to you on January 22, 2010.”

Mr. Brezenoff declined to comment Thursday, but his swift withdrawal of the offer seven days after submitting it reflected his reputation as a skilled player of political hardball, skills honed as a former president of the New York City Health and Hospitals Corporation, executive director of the Port Authority of New York and New Jersey and a deputy mayor in the administration of Mayor Edward I. Koch.

His letter indicated that the door was still open to negotiation if St. Vincent’s came back to him on his terms. “Needless to say, I hope, we stand ready to resume discussions and negotiations at any time if it appears that this would be productive,” the letter said.

Sister Jane Iannucelli, the vice chairwoman of St. Vincent’s board, declined on Thursday to comment on Mr. Brezenoff’s letter.

Council Speaker Christine C. Quinn put a positive spin on Mr. Brezenoff’s decision, saying it could be good for the hospital, because it indicated “a growing recognition of all the parties involved in this process that the community is not going to accept a proposal that doesn’t sustain a full-service hospital.”

Continuum was absent from a meeting Wednesday with Gov. David A. Paterson, Mr. Amoroso, local elected officials, union leaders and hospital creditors to discuss a long-term solution for the hospital’s financial problems. The governor said after the meeting that the state had agreed to keep St. Vincent’s afloat for at least a month while it looked for partners.

Mr. Brezenoff suggested in his letter that the state had been critical of Continuum’s plan to eliminate the hospital’s inpatient beds and close its emergency room. Diane Mathis, a spokeswoman for the state Health Department, said the department had taken a neutral position on it. “This process has really just begun,” she said.

The Decline of St. Vincent’s Hospital

By Anemona Hartocollis

For more than 150 years, St. Vincent’s Hospital Manhattan has been a beacon in Greenwich Village, serving poets, writers, artists, winos, the poor and the working-class, and gay people.

It has treated victims of calamities: the cholera epidemic of 1849, the sinking of the Titanic in 1912, the 9/11 attack and, just last year, the Hudson River landing of US Airways Flight 1549. The poet Edna St. Vincent Millay got her middle name from the hospital, where her uncle’s life was saved in 1892 after he was accidentally locked in the hold of a ship for several days without food or water.

But today the hospital is struggling, and last week, in what could mean the death knell of the last Roman Catholic general hospital in New York City, a chain of hospitals proposed to take over St. Vincent’s, shut down its inpatient beds and most of its emergency room services, and convert it into an outpatient center tied to hospitals uptown and on the East Side.

Gov. David A. Paterson’s office said on Tuesday the state was extending a $6 million emergency loan to help St. Vincent’s meet its payroll, an indication of how dire its finances had become.

How St. Vincent’s went from a cherished neighborhood institution to one threatened with extinction is a chronicle of increasingly troubled management whose problems were made worse by the economics of the health care industry, changes in the fabric of a historic neighborhood and the low profit potential in religious work.

It was once part of the Roman Catholic Church’s social and political network in New York City, a cradle-to-grave embrace of parishioners who were born in Catholic hospitals, educated in parochial schools, married in the church and given last rites by a priest.

Last week, a day after the announcement of the proposed takeover, members of the Sisters of Charity, the Catholic order of nuns that founded the hospital in 1849, gathered for a noon Mass at St. Vincent’s second-floor chapel and vowed to fight. “We are not going away,” said Sister Jane Iannucelli, vice chairwoman of the hospital board, standing in the light of stained glass windows.

“One of the things that’s so crucial to the Sisters of Charity is serving the poor,” she said.

It was that very calling, some industry executives suggested, that may have helped make the hospital obsolete.

“Helping the poor is indeed the mission and the cause célèbre,” said Kenneth E. Raske, president of the Greater New York Hospitals Association, a trade group. “Therein lies the dilemma.”

Other hospitals emphasize high-tech care and rush to invest in the fancy equipment and celebrity doctors that attract patients with the means to pay for them; St. Vincent’s sticks to its motto of “compassionate care,” rooted in its origins as a place that trained nurses and that was under the auspices of nuns.

As the Village changed, becoming home to more middle-class families, by many accounts St. Vincent’s failed to change with it. In 2007, several years after an ill-fated merger with other Catholic hospitals, St. Vincent’s management proposed selling off its maze of outdated buildings around Seventh Avenue and 12th Street to build a state-of-the-art high-rise building across the street, to be designed by Pei Cobb Freed & Partners Architects, famous for cutting-edge projects like the glass pyramid expansion of the Louvre museum in Paris and the John Hancock Tower in Boston.

But some said it was too late. In an indication of how St. Vincent’s reputation had fallen in the neighborhood, during a fierce debate over whether to demolish a low-rise Modernist building to make way for the new hospital, the actors Susan Sarandon and Tim Robbins suggested that St. Vincent’s no longer served the neighborhood well.

“I would not want to bring my children there,” Ms. Sarandon declared at a landmarks preservation hearing.

At the height of the AIDS epidemic in the 1980s, St. Vincent’s ministered to those affected, and was bursting at the seams. But by the 1990s, drugs and public awareness helped bring AIDS under control, and the Village’s wealthy newcomers were choosing other hospitals.

From 1996 to 2007, the most recent year for which figures are available, the number of patients the hospital admitted went down by 10 percent, while the rate for hospitals citywide was flat, state records show.

And its emergency room volume has been growing faster than the citywide rate, suggesting that it has the worst of both worlds — more emergency room patients and fewer inpatient admissions, which are where the money is.

St. Vincent’s is a major city contractor for homeless services, and hospital administrators said that homeless people from all over the city find their way there for treatment.

In short, many of the patients who frequent St. Vincent’s are part of the old Village rather than the new Village, as was clear from a tour of the emergency room last week. It was electric with activity, every bed filled. Many of the patients were elderly, from Chinatown, or grizzled remnants of the Village’s old working class. Nuns from Mother Theresa’s order hovered about.

The room, like other parts of the hospital, had a homey feeling, more like a place television’s kindly Dr. Marcus Welby would have taken his patients rather than the overly caffeinated environment of “House.”

“There’s a sense we’re here for the mission, and it truly permeates,” said Dr. Eric Legome, the chairman of emergency medicine.

Despite 62,000 emergency visits, nearly 1,800 births, almost 22,000 hospital admissions and 263,000 outpatient visits a year, according to St. Vincent’s officials, the hospital is bleeding red ink, and has been for years.

Hospital officials, who asked not to be named because of the sensitivity of negotiations with Continuum Health Partners, the chain that has offered to take over the hospital, said the hospital was close to having to declare bankruptcy for the second time since 2005. It is about $700 million in debt.

Officials blamed a high rate of poor and uninsured patients as well as cuts in Medicare and Medicaid and the hospital’s inability to negotiate favorable contracts with health insurance companies, claiming their fees were 30 percent below the market rate.

Catholic hospitals in some parts of the country continue to thrive, but the New York City hospital field is much different from what it was 100 years ago; New Yorkers with health insurance now can choose from a number of prestigious hospitals.

To remain competitive, in 2000 St. Vincent’s merged with several other Catholic hospitals to form St. Vincent Catholic Medical Centers.

Along with the flagship hospital in the Village, it ran seven other hospitals: Bayley Seton and St. Vincent’s on Staten Island; Mary Immaculate, St. John’s and St. Joseph’s in Queens; St. Mary’s in Brooklyn; and St. Vincent’s Westchester, in Harrison, N.Y. It was also affiliated with St. Vincent’s Midtown, formerly St. Clare’s, in Midtown Manhattan.

The merger was conceived as a way to streamline management and give the hospitals pricing leverage, but it was troubled from the beginning. After closings and sales, the network was left with just one New York City hospital, the flagship; a psychiatric and substance abuse treatment hospital in Westchester; and several nursing homes and other outpatient facilities. Some of St. Vincent’s debt was inherited from the closed hospitals.

Over the last few years, St. Vincent’s has tried to polish its image, recruiting the Giants quarterback Eli Manning and former Mayor Rudolph W. Giuliani to raise money and attract customers.

It has traditionally been one of the beneficiaries of the Alfred E. Smith Foundation Dinner, an annual charity roast at the Waldorf-Astoria, where John McCain and Barack Obama traded jabs just before the 2008 election. The hospital’s chairman is Alfred E. Smith IV, a prominent Wall Street investment banker and the great-grandson of the New York governor who ran for president in 1928. Mr. Smith did not respond to a request for an interview.

In 2004, St. Vincent’s turned over management to Speltz & Weis, the first in a series of turnaround consultants. It paid the firms millions of dollars a year to run the hospital and hired their officials as hospital executives. The system filed for Chapter 11 bankruptcy protection in early July 2005, when it appeared, according to court papers filed by hospital creditors, that it would be unable to make its payroll.

In a lawsuit filed in 2007, some of the hospital’s creditors painted a picture of a hospital system trapped between unscrupulous consultants and a passive or gullible board. The lawsuit accused David E. Speltz and Timothy C. Weis, the hospital system’s former chief executive and chief financial officer, of delaying the bankruptcy organization while they and their consulting firm collected millions of dollars in fees.

The lawsuit accused them of hiring high-priced contractors and padding their fees, instead of using hospital employees to do work. And it says they leveraged their positions with the hospital to negotiate the sale of their consulting company to Huron Consulting Group, in Chicago, also a defendant in the case.

From 2004 until the lawsuit was filed, St. Vincent’s paid Speltz & Weis, which was based in New Hampshire, $30.8 million and Huron $1.2 million in fees and expenses, according to court papers.

The expenses included a personal membership in a private university club; trips to New York for spouses; hundreds of dinners in Manhattan restaurants’ opera tickets; groceries, dry cleaning and laundry bills; and travel and housing fees for consultants from outside New York, according to court papers.

Lawyers for Mr. Speltz and Mr. Weis did not return calls for comment. But they said in court papers that the creditors had written a “revisionist” history of events that unfairly blamed their clients for a bankruptcy that was actually caused by a $60 million shortfall in accounts receivable that had not been detected by auditors. Their firm had to bring in contractors for important jobs because previous St. Vincent’s managers had unwisely eliminated key positions, the lawyers said. The lawsuit is headed for mediation.

The current chief executive, Henry J. Amoroso, is its fourth since 2004. He did not respond to requests for comment. St. Vincent’s board announced last weekend that it had retained another crisis management firm, Grant Thornton.

Sister Jane, the vice chairwoman, acknowledged that the hospital was on the precipice. “We have had enough money to pay our salaries,” she said, but added, “The cash flow has gotten tighter and tighter, and yes, we are in a very vulnerable position.”

Last Thursday night, more than 500 people crowded into a basement meeting room at Our Lady of Pompeii Church on Carmine Street to protest the proposed takeover. One man, Mark Leonard, spoke of how a nurse offered to come to his house and baby-sit after he took home his very fragile twins from the St. Vincent’s intensive care unit.

“You guys must be exhausted,” he remembered the nurse calling to say. “You need a night out with your wife.”

Nancy Spannbauer, a program director for the Penn South senior citizens’ program in Chelsea, told of how she had been in the home of a 91-year-old woman a few days earlier while a doctor tried to get the woman to go to the hospital.

“Eventually she gave in,” Ms. Spannbauer said. “And she said, ‘Well, I suppose if I have to, I’ll only go to St. Vincent’s.’ ”

St. Vincent’s Gets Loans for a Four-Week Reprieve

By Anemona Hartocollis

The financially ailing St. Vincent’s Hospital Manhattan in Greenwich Village got a month’s reprieve on Wednesday, as Gov. David A. Paterson met with hospital officials, elected officials and others to try to keep the hospital from closing.

After the 90-minute meeting in his Manhattan office, the governor said that he expected to be able to keep the hospital afloat for the next four weeks through a combination of state loans and help from its creditors. On Tuesday, St. Vincent’s received an $8 million loan — $6 million from the state and $2 million from a creditor — just to meet its current payroll.

But Governor Paterson was guarded about the hospital’s long-term prospects, saying only that he was forming a task force to look at how to run the hospital more efficiently and to examine the health care needs of the surrounding community and how they might best be delivered.

“We are trying to give it every chance to survive,” Governor Paterson said of St. Vincent’s. But he said the hospital had lost $80 million last year, and made it clear that the state’s offer of help was not open-ended, saying, “We don’t want to put supplies on a sinking ship.”

One person who was at the meeting, who asked not to be named because the meeting was private, said St. Vincent’s newly hired restructuring consultant, Mark E. Toney, had suggested that as much as $20 million might be needed to stabilize the hospital.

St. Vincent’s, which is carrying $700 million in debt, revealed last week that it had been looking for a partner to help keep the hospital from going bankrupt for the second time in five years or being forced to close. Continuum Health Partners, which operates St. Luke’s Roosevelt and Beth Israel hospitals in Manhattan, among others, is the only potential partner to have stepped forward.

But Continuum’s plan to close down the hospital’s inpatient beds and emergency room, turning it into an outpatient operation, generated immediate opposition from the neighborhood.

The hospital, founded by the Sisters of Charity, has been serving Greenwich Village since 1849, and is the last remaining Roman Catholic general hospital in New York City.

The governor said that the Continuum plan had not specifically been discussed at the meeting, but that “when you have a hospital teetering on the verge of insolvency, there isn’t any relief you won’t consider.”

Among others at the meeting were City Council Speaker Christine C. Quinn; Alfred E. Smith IV, the chairman of St. Vincent’s board; hospital creditors and the state health commissioner, Dr. Richard F. Daines.

“We seem to have bought the hospital another four weeks, so that’s a good thing,” Ms. Quinn said. “We’re not in as much of a panic mode.”

Kenneth E. Raske, president of the Greater New York Hospital Association, who was also at the meeting, said there seemed to be a willingness on the part of both the state and private creditors to extend credit to St. Vincent’s while it tried to restructure. “The prognosis here is not a good one, but it’s probably the best thing that can be done at this point in time,” Mr. Raske said.

St. Vincent’s merged with several other Catholic hospitals in 2000, but many of those hospitals were in poor neighborhoods, and the merger seemed to only deepen its financial problems. It filed for bankruptcy protection in 2005 and divested itself of most of the other hospitals, which were sold or closed.

But St. Vincent’s officials said the main hospital had been hobbled by mortgage debt and pension obligations from the divested facilities, as well as the recession, Medicare and Medicaid cuts and a high proportion of poor patients.

Offer to Take Over Ailing Hospital Stirs Outcry

By Anemona Hartocollis

One of New York City’s largest hospital systems has made an offer to take over the financially struggling St. Vincent’s Hospital in Greenwich Village, provoking opposition from elected officials who fear the loss of critical medical services, especially emergency care, for tens of thousands of patients who could be sent elsewhere.

The proposal by the hospital system, Continuum Health Partners, to take over St. Vincent’s and turn it into an outpatient center would mean the loss of the city’s last Catholic general hospital, at least in the form in which it has been known for more than 160 years.

St. Vincent’s treats a disproportionate number of poor, homeless and uninsured patients, who could be forced to go elsewhere for emergency and inpatient care, perhaps to the city-run Bellevue Hospital Center across town. St. Vincent’s acquired significance for many New Yorkers in the days after Sept. 11, 2001, when it became a gathering place for people searching for loved ones.

It has been looking for a financial lifesaver to help it stem millions of dollars a month in losses and to stave off the possibility of a second bankruptcy after emerging from its first in 2007. The Continuum proposal would turn the hospital into a walk-in health-care center that would maintain some emergency services but would no longer take 911 ambulance calls, the most serious cases. It also envisions maintaining St. Vincent’s well-known H.I.V. and psychiatric services.

If the deal goes through, Continuum could get tens of thousands of new patients. Depending on how the deal is structured, Continuum could take over St. Vincent’s valuable real estate, which could potentially be sold. There would be no exchange of money; Continuum would take on the hospital’s debt, said to be around $700 million, and try to restructure it with financial support from the state and creditors.

The proposal would not include other St. Vincent’s facilities around the metropolitan area, or its nursing homes and its psychiatric and substance abuse hospital in Westchester County.

A decision to sell is up to the board of St. Vincent’s, but the hospital is under pressure from creditors and the state to find a solution to its problems. Henry J. Amoroso, the president and chief executive of St. Vincent’s, sent a one-page memorandum to hospital physicians and staff members Tuesday confirming that the hospital had received a letter of interest from Continuum. Mr. Amoroso said he was writing in response to a report in The New York Post on Tuesday outlining some aspects of the proposal.

Mr. Amoroso said the hospital was in “serious discussion” with GE Capital and TD Bank, which hold some of its debt, “about how best to restructure the burdensome debt that we were left with when we emerged from bankruptcy.”

He said the hospital’s board was still trying to find “the best solution to allow St. Vincent’s to remain an acute-care hospital.”

Community reaction was strong. A united front of West Side politicians, including Christine C. Quinn, the City Council speaker; Scott M. Stringer, the Manhattan borough president; and Representative Jerrold L. Nadler, sent a letter to Dr. Richard F. Daines, the state health commissioner, saying that the proposed conversion was “unacceptable.”

They pointed out that it would leave much of the West Side without a hospital. Likely destinations for patients of St. Vincent’s, which has several buildings clustered around Avenue of the Americas, Seventh Avenue and 11th and 12th Streets, are St. Luke’s-Roosevelt Hospital Center, with components on West 59th and West 114th Streets, and Beth Israel Medical Center, on First Avenue and 16th Street, both owned by Continuum. Others are Bellevue, a few blocks north of Beth Israel, and New York Downtown Hospital, near the Brooklyn Bridge.

Ms. Quinn suggested that a state-sponsored bailout or restructuring might be in order. “No one’s cavalier about the seriousness of St. Vincent’s financial house,” she said in an interview. “But what we need is to come together and find a solution that keeps it open, not one that basically abdicates the state’s responsibility to have full-service health care infrastructure for the West Side of Manhattan.”

In a statement, Continuum said that it had been invited by St. Vincent’s to make a proposal to preserve the hospital in some form as “an alternative to financial liquidation.”

It added that if St. Vincent’s rejected the proposal and tried to continue on its own, “they have our full support.”

The State Health Department also issued a statement Tuesday painting a dire picture of St. Vincent’s financial condition and saying that Dr. Daines had been trying to help broker a deal that would “ensure that residents of the West Side of Manhattan continue to have access to quality health care services.”

But the department said that St. Vincent’s “is not competitive within its market.” The hospital has been losing $5 million to $10 million a month, according to the state.

Hospitals across the city have suffered from what they say are low reimbursement rates from the government and private insurers; large numbers of poor patients; and, more recently, the recession, coupled with state health-care cuts.

In what some health-care officials characterized as a last-ditch effort, St. Vincent’s has been hoping to stay in business by building a new hospital, which would free up a large part of its property to be sold for about $310 million to the Rudin Organization, which would develop housing.

The plans would require significant rezoning. Continuum’s proposal casts doubt on the future of those development plans, said Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation.

Ana Marengo, a spokeswoman for the city’s Health and Hospital Corporation, said that Bellevue officials believed they would be able to handle their share of emergency and trauma patients from St. Vincent’s. She said Bellevue would have a harder time absorbing psychiatric patients, but Continuum’s proposal would keep psychiatric services running at the St. Vincent’s location.

Archbishop Timothy M. Dolan of New York said in a statement that it would be “sad and disappointing” if St. Vincent’s closed. Although the archdiocese does not have a role in the hospital, it said it was monitoring the situation and recognized how hard it was to run a hospital.

The hospital is sponsored by the Sisters of Charity, the Catholic order that founded the hospital in 1849, and the Diocese of Brooklyn, a consequence of a merger with Catholic hospitals in Brooklyn and Queens more than a decade ago. If the hospital were sold, the bishop of Brooklyn and the Sisters of Charity would have to decide whether to ratify the decision, said Msgr. Kieran Harrington, a spokesman for Bishop Nicholas A. DiMarzio. Monsignor Harrington said it “would be premature to comment now” on what the bishop planned to do.