Hospital’s Bankruptcy Filing Precedes Report on Closures

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The New York Sun

Victory Memorial Hospital in Brooklyn announced yesterday that it is filing for federal bankruptcy protection, just weeks before a commission appointed by Governor Pataki is scheduled to make recommendations on closing and shrinking hospitals statewide.

Officials of the 254-bed Bay Ridge hospital say their Chapter 11 filing is expected to unlock as much as $6 million in state aid and provide for up to $10 million in debtor in possession financing.

“It is no secret that Victory Memorial has been struggling financially in the past few years,” the hospital’s CEO, Vincent Calamia, said in a statement.

The so-called New York State Commission on Health Care Facilities in the 21st Century, which Mr. Pataki convened in 2005, is charged with “rightsizing” the state’s hospitals and nursing homes, which are hemorrhaging money and in some cases saddled with excess capacity. The commission has until December 1 to make recommendations on which hospitals to close or scale back.

The commission’s pending recommendation has for months left unions, politicians, and hospital administrators guessing whether their local institutions will be targeted.

Dr. Calamia said he welcomed the commission’s “guidance,” and he called the bankruptcy filing “in line with the goals of the state’s commission,” which is being headed by Stephen Berger.

Victory Memorial is not the first to file for bankruptcy protection. Last year, the city’s largest Catholic hospital network, St. Vincent’s Catholic Medical Centers, filed. And Brooklyn Hospital filed for bankruptcy as well.

A spokesman for the Greater New York Hospital Association, Brian Conway, said: “No one knows who’s going to be on that list but we don’t think any recent bankruptcies were declared because of the Berger commission.”

An outside publicist representing Victory Memorial Hospital, Gerald McKelvey said this week’s filing had been in the works for months.

“It was time to take this step,” Mr. McKelvey said, adding that the timing was not intended to preempt the commission’s report.

This latest bankruptcy announcement came the same day the City Council released its own report arguing that the state should use the hospital crisis as a catalyst to reform the health care system as the commission mulls over final recommendations.

The 40-page council report offers a mix of recommendations, including expanding government programs such as Medicare, requiring insurance companies to “‘give back’ a portion of their profits to the communities they serve,” and changing the 1996 law that deregulated how much hospitals are reimbursed by insurance companies.

“We have an obligation to make it clear to them that if they look at this only through the lens of what hospitals remain and which ones close they will not help stabilize an unstable situation, they will potentially make it more unstable,” the council speaker, Christine Quinn, said during a news conference at the Betances Health Center in Chinatown.

Ms. Quinn, who plans to discuss the issue when she meets with Eliot Spitzer, the governor-elect, said the commission’s membership is too homogenous and isn’t representative of the city.

“The commission hasn’t been a public-enough entity,” Ms. Quinn said. “So I think more transparency would have been a good thing for the commission.”


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