Report: SUNY hospitals are ran well but legislative mandate causing problems

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By JESSE J. HOLLAND, Associated Press Writer

ALBANY, N.Y. (AP) -- Despite running a yearly shortfall, the State University of New York's three teaching hospitals ''operate more efficiently than 75 percent of their peer academic medical centers,'' a nationally-recognized health care consulting firm said Friday.

Although improvements in group purchasing, strategic planning and consolidations could potentially save about $43 million annually, in general the teaching hospitals in Stony Brook, Syracuse and Brooklyn are in good shape businesswise, said PricewaterhouseCoopers in its report to the SUNY administration.

''The report clearly demonstrates that SUNY's hospitals are generally well managed,'' SUNY Chancellor Robert King said.

But the teaching hospitals won't make money anytime soon, the report warned.

''It is not anticipated that the financial results of the hospitals will improve,'' the company said.

And some of the suggestions PricewaterhouseCoopers offered, including consolidation of some programs, could lead to some personnel layoffs but nothing major, SUNY spokesman Jon Sorensen said. ''The report points out how these are well run, well managed places,'' he said. ''If they're well run, then it's suggested that there's no fat.''

The university system's teaching hospitals have been running a shortfall in the past few years, which led SUNY to ask PricewaterhouseCoopers to study the hospitals' operating systems.

The problem has been traced to a legislative mandate for the hospitals to transfer $116 million in state and federal funding to the SUNY system every year. In the past, the three hospitals have been able to meet the mandate. However, it is unlikely the hospitals will be able to come up with all of the money this year or anytime in the future because of higher costs and reduced federal and state money, the report says.

The teaching hospitals were only able to transfer $39 million last year and had to borrow the rest. The hospitals have paid back all but $20 million and that will be repaid by April, Sorensen said.

SUNY administrators have asked the Legislature in past years to approve changes which could ease the hospitals' balance sheets, including the negotiation of local labor contracts and making it easier for the hospitals to borrow money. SUNY Chancellor Robert King also has not ruled out asking the Legislature for additional money in the state budget to take care of the shortfall.

University officials told state legislators earlier this year that they were waiting for PricewaterhouseCoopers to finish their study before recommending any actions to address the shortfall. But even with the changes suggested by the health care firms, the university hospitals would still be in the red by at least $83 million a year.

SUNY officials have said the shortfall will not force them to raise tuition at the rest of the university system's campuses.

PricewaterhouseCoopers was paid $1.1 million for the study.

AP-ES-03-10-00 2119EST