LICH Factbook 2.

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Provided by the Cobble Hill Association Prepared by Jeff Strabone Last updated: May 1, 2013

Update: The Seven Key Points remain unchanged from Factbook 1 (dated March 19). The Timeline, however, contains a ton of new information. See especially the May 1, 2013 RFI document which provides the most comprehensive set of facts about LICH that we have seen so far. The section on the proposed legislation to allow for-profit corporations to operate a hospital in Brooklyn has been updated: although the legislation was blocked in the Assembly, Governor Cuomo continues to support it.

Purpose To provide reliable, sourced information, with quotations and links, for all parties interested in the future of LICH. The summary of Seven Key Points provides the main points as we see them. The all-inclusive Timeline is for those who want to know everything there is to know.

Sections of this document 1. Summary: Seven Key Points 2. Timeline of events 3. Proposed legislation

Contact Roy Sloane, President of the Cobble Hill Association: roysloane@earthlink.net

SEVEN KEY POINTS: LICH AND SUNY FACTS
The SUNY Board of Trustees has voted to seek the NYS Department of Health’s approval to close LICH. The Trustees claim that LICH is a financial burden on SUNY Downstate. Despite SUNY’s spin, the evidence tells a different story:

LICH is not bringing down SUNY Downstate; SUNY Downstate is bringing down LICH.
The documentary evidence in this report, compiled strictly from the NYS Comptroller’s audits of SUNY Downstate and SUNY’s own online data, shows that SUNY Downstate is over $100 million in the red even without LICH. In fact, LICH was on the rebound before its takeover by SUNY, as shown below, with losses of only $4.7 million in 2010, the year before the merger. As the NYS Comptroller’s audits show, SUNY Downstate is financially incompetent. And, as SUNY’s own materials show, at the same time that SUNY is moaning about the difficulties hospitals face in today’s market, they want to close LICH in order to open another hospital elsewhere in Brooklyn. Meanwhile, the state legislature is considering a bill to allow a for-profit corporation to operate hospitals specifically in Brooklyn. All the evidence appears below with links to the sources. Happy reading! The NYS Comptroller’s January 17, 2013 audit of SUNY Downstate is available here: http://osc.state.ny.us/audits/allaudits/093013/12s72.pdf

1. SUNY was looking into LICH’s real-estate value even before the NYS Comptroller’s audit in January 2013.
SUNY Downstate admitted in comments to the NYS Comptroller that they already had appraisals of LICH’s real estate.
NYS Comptroller's audit, page 19, SUNY's comments on the draft audit:

“DMC [Downstate] does have recent appraisals that show values of the PPE [Property Plant and Equipment] ranging from $280-$500 million, which results in assets exceeding liabilities.”

2. The State’s declining support has driven SUNY Downstate’s downfall.
The State itself has pulled the rug out from under SUNY Downstate. You can't blame LICH for that.
NYS Comptroller's audit, page 10:

“According to Hospital officials, when the State Medicaid program cut reimbursement for psychiatric, acute care and rehabilitation services in 2011, the Hospital had to absorb a $20 million loss.” “Between 2010 and 2011, direct State tax support from SUNY to the Hospital went from $36 million to $27 million; a decline of $9 million. Moreover, between fiscal years 2007-08 and 2011-12, annual State support decreased by $23.5 million.” “SUNY support for indirect costs and debt service fell from $7.7 million in 2010 to about $1.8 million in 2011; a decline of $5.9 million.”

3. LICH was on the rebound before SUNY took over. SUNY itself? Not so much.
SUNY Downstate acquired LICH in May 2011 and ran it into the ground. In 2010, the last full year before the takeover, LICH was on the rebound.
NYS Comptroller's audit, page 10:

“In fact, for 2009 and 2010, LICH had operating losses of $39.1 million and $4.7 million, respectively.”

LICH Factbook Prepared by the Cobble Hill Association

Meanwhile, SUNY Downstate was running itself into the ground all on its own.
NYS Comptroller's audit, page 10:

“For the year ended June 30, 2012, the Hospital (including its three component facilities) reported expenses totaling $853.2 million. The Hospitals financial statements showed a loss totaling $275.8 million for the year ended December 31, 2011.” LICH is not pulling down Downstate. Downstate is pulling down LICH. NYS Comptroller's audit, page 14: “The Hospital [Downstate] anticipates that the structural cash deficit excluding LICH would increase from $71.7 million for the 2011-12 fiscal year to $92.5 million for the 2013-14 fiscal year. The structural cash deficit for LICH would increase from $0.9 million for the 2011-12 fiscal year to $72.5 million for the 2013-14 fiscal year.”

4. At the same time that the SUNY Board of Trustees is trying to close LICH and moaning about the difficulties hospitals face, they are simultaneously planning to open a new hospital elsewhere in Brooklyn.
According to page 4 of SUNY’s February 28, 2013 Power Point presentation, phase three of their Plan, after closing LICH, is to open a new hospital elsewhere. “Phase 3 – Pursue a Brooklyn Solution and Long-Term Sustainability for Downstate Medical Center Develop a plan for creating a Brooklyn hospital consortium, including significant affiliations and partnerships that will serve to make Downstate Medical School the medical school for hospitals in Brooklyn. Explore the potential of the consortium to develop a new hospital for central/northern Brooklyn.”
http://www.suny.edu/Board_of_Trustees/webcastdocs/9%20-%20Future%20for%20Downstate%20Medical%20Center.pdf

5. SUNY Downstate is incompetent. Don't believe us. Take it from the NYS Comptroller.
One of the Comptroller's 'Key Findings' was financial mismanagement by SUNY Downstate.
NYS Comptroller's audit, page 1:

“Primary reasons for the Hospitals financial stress include: the costs associated with the acquisition and operation of the LICH and Bay Ridge facilities amidst an already deteriorating fiscal environment; the failure to take timely actions to address emergency health care issues impacting the Brooklyn community; and weak governance and ineffective financial management.”

6. The NYS Comptroller's previous audit of SUNY Downstate, in 2012, found waste, fraud, and abuse.
NYS Comptroller's audit, page 6:

“The report concluded that Downstate had poor procurement practices that led to fraudulent and uneconomical vendor selection, inefficient implementation of a multimillion dollar software system, and conflicts of interests between an employee and a vendor. These deficiencies likely contributed to the financial distress at the Hospital.”

LICH Factbook Prepared by the Cobble Hill Association

7. SUNY Downstate has no plan, never had a plan, and ignores its own consultants' recommendations for cost-cutting.
How incompetent is SUNY Downstate? They don't even have minutes of their meetings with their accountants, let alone a financial plan!
NYS Comptroller's audit, page 8:

“To further understand the ability of the Hospital to remain a going concern in 2013, we contacted the Hospitals independent CPA firm to ascertain the firms view of the Hospitals finances. The CPA firm advised us that it had not reached any conclusions and is seeking a financial plan from the Hospital so that it can assess whether the Hospital will remain a going concern in 2013. In addition, the CPA firm reported that it met with SUNY and Hospital officials in October 2012 to discuss, among other things, the Hospitals financial viability. On November 15, 2012, we asked Hospital officials for minutes and/or supporting documentation regarding the meeting with the CPA firm, but were told that these items were not yet available. We share the CPAs position that a financial plan, demonstrating how the Hospital will remain a going concern in 2013, is essential. As discussed in more detail later in this report, the Hospital has been unable to provide us with documentation that clearly details the time frames and necessary steps to achieve financial stability.” SUNY Downstate paid $3.1 million to Pitts Management Associates, a consultant, to find ways to cut costs. Pitts found $65.7 to $70.7 million in savings, but SUNY Downstate did nothing to implement the cuts. NYS Comptroller's audit, page 13: “In November 2011, Pitts identified several measures that would enhance revenues and save money. According to Pitts, these actions could be undertaken immediately and would result in $70 million of savings [...] Although nearly a one year had passed since the action steps were identified, as of October 2012, Hospital officials were unable to provide any documentation and analysis to track the savings achieved on an ongoing basis by implementing the steps identified by Pitts. We believe that it is essential that Hospital management be able to demonstrate the status of all steps recommended by the consultant and the actual and projected short term and long term fiscal impacts accruing from them.” Despite ignoring Pitt's cost-cutting recommendations, SUNY Downstate plans to pay them millions more. NYS Comptroller's audit, page 15: “In addition, Hospital officials anticipate that as much as $20 million in additional contract payments to Pitts will also increase the structural cash shortfall. In December 2012, the State approved a 9-month contract worth $5.6 million with Pitts.”

Conclusion
LICH is not the problem. SUNY Downstate is the problem. SUNY is trying to sacrifice LICH to pay for its own sins of mismanagement and incompetence. Our communities in Brooklyn should not be the scapegoats. Save LICH. Fire SUNY.

TIMELINE OF EVENTS
Quotations appear as blue indented text. Bold was added for emphasis by Jeff Strabone. NOTE: SUNY’s Board of Trustees continues to circulate claims that the majority of LICH’s beds are unoccupied. These claims are based on deliberate misrepresentation. As the Daily News explained on January 24, 2013: The figure [used by SUNY] refers to “certified beds” — the number of beds the state has authorized LICH to operate. But over the past 15 years, LICH has been cutting down the number of beds it actually uses and has staff members to provide care for. The number of staffed beds is about 260 — and on average 237 per day or more than 90% of them were in use last year, an internal document from SUNY Downstate managers indicates. http://www.nydailynews.com/life-style/health/suny-trustees-vote-pulling-plug-lich-article1.1247221

October 14, 2010 -SUNY is granted $62 million to acquire LICH. Press release from Governor David Paterson: Governor David A. Paterson today announced that State University of New York (SUNY) Downstate Medical Center has been awarded a $40 million State grant to acquire and operate Long Island College Hospital (LICH), which will become a second campus of University Hospital of Brooklyn (UHB). "One of our main health care goals is to ensure that all New Yorkers have access to high quality care in their communities," Governor Paterson said. "The HEAL grant is an important investment in the future of health care in Brooklyn and will allow SUNY Downstate to create another campus to better serve local residents and continue to train the next generation of physicians." The funding is being provided by the New York State Department of Health and the Dormitory Authority of the State of New York (DASNY) through Phase 19 of the Health Care Efficiency and Affordability Law for New Yorkers (HEAL NY), which support efforts that improve the efficiency and affordability of New York's health care system. The $40 million HEAL NY grant and a $22 million HEAL NY grant awarded in October 2009 will also assist SUNY Downstate in retiring LICH debt and in the payment of costs associated with the integration of clinical and financial operations between SUNY Downstate and Continuum Health Partners, which managed LICH. http://www.governor.ny.gov/archive/paterson/press/101410sunylich.html

LICH Factbook Prepared by the Cobble Hill Association

May 29, 2011 -SUNY purchased LICH.

June 2011 -NYS Department of Health creates Brooklyn MRT Health Systems Redesign Work Group, headed by Stephen Berger, to assess strengths and weaknesses of Brooklyn hospitals. Members of the Work Group and their profiles: http://www.health.ny.gov/health_care/medicaid/redesign/brooklyn.htm CHAIR: Stephen Berger, is Chairman of Odyssey Investment Partners (OIP), LLC, a New York investment firm that specializes in private corporate transactions. Mr. Berger's public service activities include: Chairman of New York State Commission on Health Care Facilities in the 21st Century (2005 – 2006); Chairman of New York State Governor's Task Force on Health Care Reform 2003-2005; Member of Medicaid Redesign Taskforce (MRT), 2011; New York State Commissioner of Social Services and Member of the Board of Social Welfare; Executive Director of the New York State Emergency Control Board for the City of New York; Executive Director of the Port Authority of New York and New Jersey from 1985-1990. Chairman of the Board, United States Railway Association, where he was the United States Government "Banker" responsible for structuring Conrail's emergence from bankruptcy; member of the Board and Chairman of the finance committee of the Metropolitan Transportation Authority.

November 28, 2011 -Report issued by Brooklyn MRT Health Systems Redesign Work Group, headed by Stephen Berger. http://www.health.ny.gov/health_care/medicaid/redesign/brooklyn.htm http://www.health.ny.gov/health_care/medicaid/redesign/docs/brooklyn_mrt_final_report

April 9, 2012 -NYS Comptroller issues audit report 2010-S-45 entitled “State University of New York: Downstate Medical Center - Allegations of Procurement Fraud, Waste and Abuse”. http://osc.state.ny.us/audits/allaudits/093012/10s45.pdf The 2013 audit describes the 2012 audit’s conclusions this way: Downstate had poor procurement practices that led to fraudulent and uneconomical vendor selection, inefficient implementation of a multimillion dollar software system, and conflicts of interests between an employee and a vendor. These deficiencies likely contributed to the financial distress at the Hospital.

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LICH Factbook Prepared by the Cobble Hill Association

Thursday, January 17, 2013 -NYS Comptroller DiNapoli released an audit showing a fiscal crisis at LICH. http://osc.state.ny.us/audits/allaudits/093013/12s72.htm http://osc.state.ny.us/audits/allaudits/093013/12s72.pdf Note: The audit covers all of SUNY Downstate, not just LICH. It is short and clear enough that interested parties should feel encouraged to read it themselves. http://osc.state.ny.us/audits/allaudits/093013/12s72.htm http://osc.state.ny.us/audits/allaudits/093013/12s72.pdf page 1 Downstate employs about 8,000 faculty and staff and is the fourth largest employer in Brooklyn. It reported expenses for the year ended June 30, 2012 totaling $853.2 million. page 1

Key Findings 
• The Hospital is facing potential insolvency within a matter of months. Absent other actions or plans to increase revenue or limit expenses, the Hospital will not have sufficient cash to meet its liabilities, possibly as early as May 2013, and it will be forced to make choices about which financial obligations it will honor. • The Hospital has experienced cash shortfalls averaging nearly $3 million each week. Its operating loss for the six months ended June 30, 2012 was $113.5 million, and its losses for 2012 could exceed $200 million. The Hospital’s aggregate operating and non-operating loss for 2011 was $275.8 million. • Present actions and plans to deal with the Hospital’s looming insolvency are insufficient to restore financial stability. While the Hospital has hired a consultant to help identify solutions, a full complement of recommendations has not been formulated. • Primary reasons for the Hospital’s financial stress include: the costs associated with the acquisition and operation of the LICH and Bay Ridge facilities amidst an already deteriorating fiscal environment; the failure to take timely actions to address emergency health care issues impacting the Brooklyn community; and weak governance and ineffective financial management.

Key Recommendations 
• Work with SUNY System Administration, state policymakers, union officials and the Brooklyn community to identify and implement solutions that balance the Hospital’s fiscal stability with health care and economic needs of the community and the strategic goals of Downstate Medical Center.

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LICH Factbook Prepared by the Cobble Hill Association

• Ensure that any decisions to acquire or expand hospital locations are thoroughly supported with documented financial analysis demonstrating the financial viability of such decisions. • Establish a Finance Committee of senior Downstate officials to periodically to review the financial status of the Hospital and recommend needed steps to improve fiscal stability. • Continue to monitor overtime and to identify measures to minimize costs. • Reassess the need to retain the current complement of administrators and reevaluate their salaries. • Work with the consultant (Pitts Management Associates) to ensure that the patient billing system is working as intended and maximizes revenue. • Establish a financial plan that charts the time frames and steps for restoring Hospital financial stability. Concurrent with the financial plan, establish ongoing monitoring that tracks the status and impacts of Action Plan steps and affords management the ability to determine the success of those steps and identify whether further steps are necessary. • Update existing cost analysis to include the costs of employee severance and contracted consulting. page 5 In fact, the financial condition of the Hospital has been deteriorating appreciably in recent years, resulting in a net accumulated deficit of $165.6 million as of December 31, 2011. page 6 In June 2012, SUNY’s Board of Trustees approved a $75 million line of credit to the Hospital to help ensure it meets its obligations and to support its restructuring efforts. On September 19, 2012, the Hospital accessed the entire $75 million line of credit. According to the terms of the loan, the Hospital must begin repaying this obligation in October 2015. On April 9, 2012, our office issued audit report 2010-S-45 entitled State University of New York: Downstate Medical Center - Allegations of Procurement Fraud, Waste and Abuse. The report concluded that Downstate had poor procurement practices that led to fraudulent and uneconomical vendor selection, inefficient implementation of a multimillion dollar software system, and conflicts of interests between an employee and a vendor. These deficiencies likely contributed to the financial distress at the Hospital. page 7

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There is considerable risk that the Hospital will not have sufficient cash to meet its financial obligations and will face insolvency in 2013. This risk arises from a lack of effective governance and financial management, the cost of hospital acquisitions and inadequate planning for external issues impacting health care delivery in the community. We recommend that Downstate work with its consultant, SUNY System Administration, state policymakers, union officials and the Brooklyn Community to identify solutions that balance the Hospital’s need for fiscal stability with the strategic goals of Downstate as well as the health care and economic needs of the community. Also, the Hospital has been incurring, and continues to incur, substantial operating and non-operating losses which totaled over $300 million for the five years ended December 31, 2011. In addition, as of June 30, 2012, the Hospital’s current liabilities (obligations due within one year) exceed its current assets (cash and other items that can be freed up within one year) by $69.5 million. These matters are discussed in detail in the following paragraphs and present a bleak and deteriorating Hospital financial picture with insolvency looming in 2013.

Current Financial Condition 
Between May 2012 and September 2012, the Hospital relied on $65 million that it drew down from the SUNY Hospital Operations Fund (account #34522). In June 2012, the SUNY Board of Trustees authorized a $75 million line of credit loan to Downstate to replace and repay the draw down from the SUNY account. With the line of credit in place, the Hospital’s cash balance on September 20, 2012 was $27.8 million. Subsequently, during the week of October 12, 2012, the Hospital received a $64.8 million DSH payment from the New York State Department of Health. As a result of the DSH payment, the Hospital’s cash balance was $73.1 million on November 18, 2012. page 8

Recent Fiscal Trends 
As shown in the table that follows, the Hospital consistently lost money from calendar year 2007 through calendar year 2011. As a result, during the period, the Hospital went from a cumulative surplus (positive net assets) of $116.2 million to a net deficit of $165.6 million. page 9 The 2011 non-operating loss of $158.5 million includes a $140 million liability related to LICH endowment funds that were used to pay professional liability claims. In addition, of the $117.3 million operating loss incurred in 2011, $44 million was attributable to the acquisition of LICH in May 2011, and the remainder was attributable to Hospital operations.

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LICH Factbook Prepared by the Cobble Hill Association

As of June 30, 2012, the Hospital’s current liabilities ($256.4 million) exceeded current assets ($186.9 million) by $69.5 million. Further, the decline in the current ratio also raises considerable doubt the Hospital will remain a going concern. page 10

Acquisition of Other Health Care Facilities  
A major cause of the Hospital’s fiscal stress is the acquisition of LICH on May 29, 2011. Under the terms of the purchase agreement, the Hospital acquired about $143 million of assets and nearly $170 million of liabilities. This resulted in a decline in net assets of about $27 million for 2011. Also, upon acquisition of the LICH, the Hospital assumed a $140 million liability related to LICH endowment funds that were used to pay professional liability claims. This liability has no fixed repayment schedule, and no interest will accrue on its unpaid balance, which would be payable to the Health Science Center at Brooklyn Foundation. Nevertheless, in accordance with generally accepted accounting principles, this liability is included on the Hospital’s financial statements. For example, Hospital officials report that LICH generated annual operating losses for seventeen consecutive years dating back to 1994. In fact, for 2009 and 2010, LICH had operating losses of $39.1 million and $4.7 million, respectively. Also, according to the Work Group, 55 percent of LICH inpatient beds (excluding beds available for newborns) were unoccupied during 2010 with an average of 284 beds unused each day. page 11 Adding to the dilemma presented by the acquisition of LICH, the Hospital on July 7, 2008 had already acquired lease space at the Victory Memorial Hospital in Bay Ridge, Brooklyn. The Hospital’s plans for Victory Memorial included the addition of 100 inpatient beds. However, the Work Group’s business plans for Victory Memorial advised that the Hospital should reconsider any planned expansion of beds at this facility to help consolidate services in the Brooklyn community. Nevertheless, the Hospital incurred about $6 million in leased costs to prepare the Bay Ridge facility for inpatient beds. To date there has been no substantial return on investment in this facility and the Hospital cancelled its plans for the 100 beds. page 12 The Hospital has or shares 15 senior administrators who each had annual salaries in excess of $200,000 for 2011. For 2011, the total annual salary for these administrators was $4,370,042 or $291,336 per employee, excluding benefits. The salaries of these employees have remained constant even as the Hospital has sent layoff notices to 469 employees whose average salary is about $63,000 for the Hospital and $41,500 for LICH. As a matter of fairness and fiscal responsibility, it would also be appropriate not only to evaluate the salaries paid to administrators, but to also determine if would be feasible to reduce the number of administrative staff.

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LICH Factbook Prepared by the Cobble Hill Association

page 13

Fiscal Improvement Plans and Actions  
In 2011, at a cost of $3.1 million, Downstate engaged a consultant (Pitts) to analyze the Hospital’s revenue cycle, physician management, patient billing, clinical programs and alignment of services. In November 2011, Pitts identified several measures that would enhance revenues and save money. According to Pitts, these actions could be undertaken immediately and would result in $70 million of savings as summarized in the table which follows. See the table on page 13 for the breakdown of the savings. Although nearly a one year had passed since the action steps were identified, as of October 2012, Hospital officials were unable to provide any documentation and analysis to track the savings achieved on an ongoing basis by implementing the steps identified by Pitts. We believe that it is essential that Hospital management be able to demonstrate the status of all steps recommended by the consultant and the actual and projected short term and long term fiscal impacts accruing from them.

Thursday, January 17, 2013 -Press release by SUNY Board of Trustees: “Statement from SUNY Chancellor Nancy L. Zimpher on Comptroller DiNapoli’s Audit of Downstate Medical Center”. http://www.suny.edu/sunynews/News.cfm?filname=2013-01-17-DownstateStatement.htm

Tuesday, January 22, 2013 -Governor Cuomo releases his proposed 2013-14 Executive Budget and Management Plan. http://publications.budget.ny.gov/eBudget1314/fy1314littlebook/BriefingBook.pdf

Thursday, January 24, 2013 -Date of letter signed by many Brooklyn elected officials to H. Carl McCall, Chairman of SUNY’s Board of Directors.

Thursday, January 31, 2013 -Epstein Becker Green law firm releases its Client Alert on Cuomo’s proposed legislation to allow a for-profit corporation to operate a hospital in Brooklyn. New York has strictly regulated the practice of medicine and the delivery of health care within its boundaries. One particular restriction, which has periodically been subject to debate over the years, is the requirement that all owners of a corporation that operates a for-profit hospital be natural persons. The reasons for this policy include the view that the provision of health care is a charitable activity and that there must be transparency and accountability as far as the owners of hospitals are concerned. This prohibition has essentially prevented investor-owned corporations from directly owning and operating hospitals in New York.

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LICH Factbook Prepared by the Cobble Hill Association

The Pilot Program, which is found in Section 104 of the Governor's 2013-14 Executive Budget Article VII Bills, would amend New York Public Health Law §2801-a to authorize the Commissioner of Health ("Commissioner") to establish the Pilot Program. The PHHPC would be responsible for approving a maximum of two business corporations formed under the New York Business Corporation Law to operate hospitals in New York State. One business corporation would operate a hospital or hospitals in Kings County and the other business corporation could operate one elsewhere in the State. In order to qualify to become an operator, the business corporation must be affiliated with a PHHPC-approved academic medical institution, to the extent satisfactory to the Commissioner. Structurally, the Pilot Program would suspend the restrictions on owners and operators of the hospitals mentioned above. This modification of New York law would allow investor-owned entities to directly invest in a hospital without the requirement that all shareholders or members of the for-profit operator be natural persons.

http://www.ebglaw.com/showclientalert.aspx?Show=17009

Friday, February 1, 2013 -Date of letter of Carl McCall’s response to elected officials’ letter of January 24, 2013. The Chancellor and the State University Board of Trustees have requested that the newly appointed leadership team at Downstate provide recommendations for immediate action to mitigate losses, one of which was the possible cessation of operating LICH as a full service inpatient hospital. The Board expects to receive further information on that recommendation soon, as part of a larger, fiscally responsible restructuring plan for Downstate. If that recommendation is pursued. Downstate will be required to submit to the State Health Department an acceptable facility closure plan. LICH continues to struggle with a negative margin, low occupancy and low market share. More than half of its beds are vacant on an average day. We are projecting a large deficit at the end of the 2013-14 fiscal year and the problem exacerbates year after year. In addition to the problems with LICH, without additional support, Downstate’s overall hospital operations will also be in a negative cash position by the end of April. McCall provides a list of reasons for the fiscal crisis, one of which is this: The complexities of the State system that limits expeditious decision making and action by SUNY hospitals, including procurement, contracts, capital projects, and state employment rules;

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Monday, February 4, 2013 -SUNY releases notice of a Public Comment Opportunity on February 7. THE STATE UNIVERSITY OF NEW YORK NOTICE OF BOARD OF TRUSTEES PUBLIC COMMENT OPPORTUNITY
Posted: February 4, 2013; Date of Public Comment Opportunity: February 7, 2013

February 7, 2013 3:00 – 5:00 p.m. The College of Optometry 33 West 42nd Street - Auditorium New York, New York 10036 Interested persons who wish to provide oral comments should register in advance to speak, by e-mailing the Board of Trustees at trustees@suny.edu or by writing to the Board of Trustees in a manner that will be received timely at: State University Plaza, T11, Albany, New York 12246. Please register by noon on Wednesday, February 6, 2013. In your e-mail or letter, please include the subject of your comments and provide a telephone number, as well as an e-mail and address, so that we can confirm that you have a reserved place on the agenda. Oral comments will be limited to no more than three minutes per speaker, except for elected officials, who will be given up to five minutes each.

Thursday, February 7, 2013 -Crain’s reports that SUNY Downstate wants to use the proceeds from LICH to build a new hospital elsewhere. Headline: “Downstate Wants New Hospital” http://www.crainsnewyork.com/article/20130207/PULSE/130209945 SUNY Downstate executives want to build a brand-new hospital to replace crumbling University Hospital, funded by the proceeds of selling Long Island College Hospital. The brazen scheme is highly speculative, given that it requires both state approval of LICH's closure as well as the state's blessing of a new hospital. The idea of building a new hospital in central Brooklyn is controversial on several fronts. The new hospital would be privatized, which would be opposed by the CSEA union. The executives of other Brooklyn facilities could challenge any use of state funding, arguing that their hospitals, too, must be rebuilt. And the proposal is tied to a pilot project, suggested in the executive state budget, that would allow for-profit investors to finance the new hospital. Meanwhile, SUNY Downstate's board meets today to discuss LICH's closure, followed by a public hearing. More information is online here. Union members from NYSNA and 1199 SEIU, as well as community groups, plan to hold a rally at the hearing.

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Friday, February 8, 2013 -SUNY Board of Trustees votes to close LICH. http://www.suny.edu/Board_of_Trustees/webcastdocs/LICH%20closure%20resolution%20%20Revised.pdf Full text of the resolution: Resolved that the Board expresses its support for the President of SUNY Downstate Medical Center to seek approval from the Commissioner of the Department of Health to cease operation of University Hospital of Brooklyn at Long Island College Hospital as a full-service inpatient health care facility; and, be it further Resolved that the Board also supports the President of Downstate Medical Center, in consultation with the Chancellor and System Administration officials, to consult with the community and other stakeholders and develop fiscally responsible plans to provide general and specialty health care services at or near the site of the University Hospital of Brooklyn at Long Island College Hospital, as the President of Downstate Medical Center shall deem appropriate, subject to any necessary approvals from the Commissioner of Health or any other necessary agency.

Friday, February 8, 2013 -Meanwhile, the Brooklyn delegation to the state Assembly and Senate heard testimony on the financial crisis facing LICH and other Brooklyn hospitals. http://www.crainsnewyork.com/article/20130211/PULSE/130209912 Brooklyn Borough President Marty Markowitz blasted Gov. Andrew Cuomo for not doing more for LICH. “The answer should not be seeking to close, but how to save,” said Mr. Markowitz. LICH’s property, he hinted, would not be easy to convert to another purpose. “There's going to be a surprise for any potential developer in terms of zoning,” he added.

Friday, February 8, 2013 -Jeff Strabone proposes by e-mail to the CHA board that we seek to change the zoning at LICH.

Thursday, February 14, 2013 -Community forum at Kane Street Synagogue held by New York State Nurses Association, 1199SEIU, Cobble Hill Association, Carroll Gardens and Boerum Hill Neighborhood Associations, and DUMBO Neighborhood Alliance.

Monday, February 18, 2013 -CHA Board meeting with City Councilman Brad Lander.

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Wednesday, February 20, 2013 -Lawsuit. The New York State Nurses Association, 1199 SEIU United Healthcare Workers East, Concerned Physicians of LICH, LLC and Kathleen Campbell, Petitioners vs. State University of New York and Trustees of the State University of New York, Respondents. Index No. 3057-2013 Judge Betsy Barros of Kings County Supreme issues temporary restraining order against SUNY preventing implementation of SUNY Board’s resolution of February 8, 2013 and prohibiting SUNY from communicating any such intent to NYS Department of Health.

Monday, February 25, 2013 -Zoning. Taking up a proposal made by the Cobble Hill Association, City Councilman Brad Lander, Brooklyn Borough President Marty Markowitz, and other elected officials request that the Department of City Planning extend the Cobble Hill Historic District’s 50-foot height limit to LICH: apply contextual zoning—in particular, a 50’ height limit—on the blocks bounded by Hicks, Henry, Atlantic, and Congress Streets, and also several lots on the east side of Henry Street, between Pacific and Amity Streets, which comprise the University Hospital of Brooklyn at Long Island College Hospital, aka the LICH campus, in order to prevent out-of-context development. http://carrollgardens.patch.com/articles/could-height-and-zoning-restrictions-help-save-lich

Thursday, February 28, 2013 -Date of letter from Brooklyn Heights Association to Governor Cuomo. http://brooklynheightsblog.com/archives/55903 Let’s be clear, the Berger Work Group, appointed by Health Commissioner Shah, did not recommend closing LICH. On the contrary, when it issued its report on Brooklyn health care in 2011, it advised Downstate to consider consolidating all Downstate inpatient services at LICH.

Thursday, February 28, 2013 -Date of Brooklyn Paper article where SUNY spokesman (and former trustee, 2005–2010) Robert Bellafiore said no consideration was given to real estate. http://www.brooklynpaper.com/stories/36/9/dtg_lichupdate_2013_03_01_bk.html Bellafiore insists Downstate has never considered such a move, and that Long Island College Hospital, which is responsible for 40 percent of Downstate’s $179-million debt,

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bleeds so much cash that the school might not see a nickel of any real estate sale. “The fact of the matter is that zero consideration has been given to the real estate factor of it,” he said. “It is so cart before the horse, it’s not even funny.”

Thursday, February 28, 2013 -Date of SUNY Power Point presentation available at the website of the SUNY Board of Trustees. Title: “A Future for Downstate Medical Center”. Source: http://www.suny.edu/Board_of_Trustees/webcastdocs/9%20%20Future%20for%20Downstate%20Medical%20Center.pdf Page 4 of this document explains SUNY’s three-stage plan to close LICH and open a new hospital elsewhere thanks to legislation that SUNY plans to pursue. THE PLAN Phase 1 – Secure $150 million in Stability Funds from New York State. $150 million is needed to keep the operation going and support mission critical items, while we work to fix many of the underlying problems that contribute to these losses. Phase 2 – Restructure the Operation for Sustainability a) Proceed with the restructuring of the operation of Downstate Medical Center. b) Cease inpatient operations at LICH. The operating losses are significant and assumptions for the acquisition, particularly related to patient volume, were significantly flawed. c) Pursue legislation which will increase the flexibility of the organization to support a more financially sustainable operation. Phase 3 – Pursue a Brooklyn Solution and Long-Term Sustainability for Downstate Medical Center Develop a plan for creating a Brooklyn hospital consortium, including significant affiliations and partnerships that will serve to make Downstate Medical School the medical school for hospitals in Brooklyn. Explore the potential of the consortium to develop a new hospital for central/northern Brooklyn. The legislation in question is most likely Senate Bill S2606-2013.

Friday, March 1, 2013 -Date of Power Point presentation by State University Construction Fund called “SUNY Hospitals & A Healthier New York: Capital Briefing”. Source: http://www.suny.edu/Board_of_Trustees/webcastdocs/8%20%20SUNY%20Hospitals%20Capital%20Briefing.pdf

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Page 14 of this document shows the outstanding debt of SUNY Hospitals as of January 31, 2013: • Downstate: $191,329,000 • Stony Brook: $187,542,000 • Upstate: $251,818,000

Friday, March 1, 2013 -Date of “Legislative Briefing” Power Point presentation by SUNY Academic Health Centers. Source: http://www.suny.edu/Board_of_Trustees/webcastdocs/7%20%20SUNY%20Academic%20Health%20Centers%20Legislative%20briefing.pdf According to what SUNY is telling state legislators in this legislative briefing, state government is to blame for SUNY’s financial hardships. Note that there is no mention here of blaming the acquisition of LICH for these problems. See page 22 of this document: SUNY Hospital Business Model Not Sustainable Due To: State support decline Labor costs Pension cost increases Procurement processes Reimbursement challenges Page 23 suggests that SUNY is itself lobbying state legislators for passage of Senate Bill S26062013: SUNY Needs Your Help to Evolve its Business Model: Provide Transformation Funding Work to Identify New Service Delivery Models IGT/MRT Waiver Opportunity Pass Flexibility Legislation

Friday, March 8, 2013 -Lawsuit. Judge Johnny L. Baynes of Kings County Supreme extends the temporary restraining order against SUNY.

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Thursday, March 14, 2013 -Lawsuit. Judge Johnny L. Baynes of Kings County Supreme decides against SUNY, rules that SUNY violated the Open Meetings Law, and voids the SUNY Trustees’ resolution of February 8, 2013 to close LICH.

Thursday, March 14, 2013 -Brooklyn Paper reports that SUNY did in fact discuss LICH as real estate. http://www.brooklynpaper.com/stories/36/11/dtg_lichrealestate_2013_03_15_bk.html Among other topics, attendees of the closed-door meeting talked about “the proposed sale of LICH realty title,” said one affidavit, filed by Lora Lefebvre, the university’s associate vice chancellor for health affairs.

Monday, March 18, 2013 -Date of Power Point presentation by the Academic Medical Centers Committee of the SUNY Board of Trustees. Title: “Advocacy Strategy for SUNY Hospitals” Source: http://www.suny.edu/Board_of_Trustees/webcastdocs/4%20%20Advocacy%20Strategies%20for%20Hospitals.pdf This documents lists the legislators SUNY has met with and “What we’ve told them”. According to page 3 of this document, in February SUNY met with these legislators: Senator Lavalle Senator Stavisky Senator Klein Senator Skelos Senator Golden Senator Flanagan Senate Brooklyn Delegation Assembly Brooklyn Delegation Assemblymember Morelle Assemblymember Brennan In March (as of March 18) they met with: Legislative Staff Workshop Alumni Legislators Breakfast Senator Hannon Senator DeFrancisco Senator Lavalle Senator Stavisky Senator Andrew Stewart-Cousins Assemblymember Glick

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Meetings are described as “Ongoing” with these offices: Governor’s Office Senate Finance Staff Assembly Ways & Means Staff Division of the Budget Department of Health

Tuesday, March 19, 2013 -In the wake of Judge Baynes’s March 14 decision that their earlier vote violated the Open Meetings Law, the SUNY Board of Trustees met again, this time upstate in Purchase, and passed a new resolution to close LICH: Resolved that the Board expresses its approval and support for the President of SUNY Downstate Medical Center having submitted a plan to seek approval from the Commissioner of the Department of Health to cease operation of University Hospital of Brooklyn at Long Island College Hospital as a full-service inpatient health care facility, and encourages all SUNY and State and local officials to move ahead with that plan as expeditiously, lawfully, safely and reasonably as possible. In her memorandum accompanying the resolution, SUNY Chancellor repeats claims about occupancy at LICH based on the number of certified beds rather than the number of staffed beds. She also ties LICH’s deficit to Downstate’s cumulative deficit: LICH continues to struggle with a negative margin, low occupancy and low market share. More than half of its beds are vacant on an average day and it is projected to end 2013/14 fiscal year with a significant negative cash balance. This deficit contributes to a larger cumulative deficit projected for Downstate Medical Center at the end of April 2013. None of the “reasons for the fiscal crisis facing Downstate” provided by Zimpher are specific to LICH: • An extremely competitive Brooklyn healthcare market vying for insured patients and an increasing presence of Manhattan based medical centers providing ambulatory care and inpatient services for Brooklyn residents, • Reductions in reimbursement rate and new payment methodologies by public and private insurers for hospital based care with concurrent growth of uninsured patients, • The complexities of the State system that limits expeditious decision making and action by SUNY hospitals, including procurement, contracts, capital projects, and state employment rules, • The high levels of health disparities in the communities which Downstate serves and the high rates of complex chronic disease, largely publicly insured,

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• Lack of adequate support from the State to operate a SUNY hospital within the complex regulatory and financial environment of the State system. http://www.lichmedicalstaff.org/doc/LICHresolutionFinal_2013.pdf Note that SUNY later issued a “Revised” text of the resolution passed on March 19: Resolved that the Board expresses its approval and support for the President of SUNY Downstate Medical Center, as the governing body of UHB, to restructure and conserve existing resources of University Hospital of Brooklyn by seeking approval from the Commissioner of the Department of Health to cease operating UHB at Long Island College Hospital as a full-service inpatient health care facility, and encourages all SUNY and State and local officials to move ahead with such plans as expeditiously, lawfully, safely and reasonably as possible. http://www.suny.edu/Board_of_Trustees/webcastdocs/LICH%20resolution-%20rev%203-19%20Final.pdf

Tuesday, March 19, 2013 -The Wall Street Journal reports that SUNY claims LICH is losing $4 million a month and Downstate is losing $12 million a month. The center as a whole is losing $12 million a month, according to David Doyle, a spokesman for SUNY. "What we're trying to do is preserve Downstate Medical," he added. http://online.wsj.com/article/SB10001424127887323869604578370791057761404.html

Wednesday, March 20, 2013 -The Daily News reports that employees at LICH have begun receiving 90-day layoff notices. http://www.nydailynews.com/new-york/brooklyn/bad-news-mail-90-day-layoff-notices-lichworkers-article-1.1294467

Tuesday, March 26, 2013 -The Daily News reports that LICH’s real estate has been valued at “between $750 million to $1 billion”. http://www.nydailynews.com/life-style/real-estate/long-island-college-hospital-propertydevelopers-buzzing-article-1.1299103

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Wednesday, March 27, 2013 -New York Times report. Although the Cuomo-backed proposal to allow for-profit investment in a hospital in Brooklyn was blocked in the State Assembly, Governor Cuomo and Stephen Berger remain committed to the idea. Richard Azzopardi, a spokesman for the governor, said, “We continue to have an interest in exploring this and any other option that will promote access to capital for the improvement of health care facilities.” http://www.nytimes.com/2013/03/27/nyregion/new-york-state-budget-drops-plan-to-allow-forprofit-investment-in-hospitals.html

Wednesday, March 27, 2013 -Crain’s Health Pulse reports that a WARN (Worker Adjustment and Retraining Notification Act) notice has been filed with the NYS Department of Labor. It specifies June 18 as LICH’s closing date. 1714 LICH employees are scheduled to be laid off between June 18 and July 1. http://www.lichmedicalstaff.org/doc/March27Crain.pdf

Friday, March 29, 2013 -The NYS Legislature and Governor Cuomo announce passage of the 2013-2014 budget. It does not include legislation to allow a for-profit corporation to run a hospital in Brooklyn.

Monday, April 1, 2013 -Lawsuit. The New York State Nurses Association, 1199SEIU United Healthcare Workers East, Concerned Physicians of LICH, LLC and Carl Biers, Plaintiffs-Petitioners, vs. New York State Department of Health, Nirav Shah, MD, in his capacity as Commissioner of the Department of Health, State University of New York, Trustees of State University of New York, State University of New York Downstate Medical Center, State University of New York Downstate Medical Center Council, and John F. Williams, MD, in his capacity as President of State University of New York Downstate Medical Center, Defendants-Respondents. Index No. 5814-13 Order to Show Cause for Declaratory Action and Article 78 Proceeding Judge Johnny Lee Baynes grants temporary restraining order barring SUNY from taking “any action in furtherance of the closure plan” for LICH until a hearing in the case scheduled for May 2, 2013. http://www.lichmedicalstaff.org/doc/4-1-13TRO%2800263291%29-c.pdf

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Thursday, April 4, 2013 -The Cobble Hill Association’s pro-LICH television commercial begins running on NY1. http://www.youtube.com/watch?v=e-fCiCUg_VM

Saturday, April 6, 2013 -The Daily News reports a “severe lack of medical supplies and equipment”. Romanelli says the surgical obstetrics-gynecology team cannot book a Caesarean section or any elective surgery after April 30. That 20 sorely needed LICH computers were just shipped to Downstate. And that there is a severe lack of other medical supplies and equipment at LICH. Romanelli shows me an e-mail from a resident doctor working desperately in the LICH trenches: “It’s becoming very difficult to work on the floors and to manage patients as the hospital is running out of supplies. Today I wanted to measure one patient’s temperature prior to discharge but there were no thermometer probe covers available. After searching, a nurse manager found one box on the entire floor. But how long will that last? One shift?” […] Steve Greenberg, a SUNY Downstate spokesperson […] confirmed that no elective surgeries will be scheduled at LICH after April 30. He could not give a reason why even though the court ordered that LICH continue to run as a fully operational hospital. http://www.nydailynews.com/new-york/brooklyn/long-island-college-hospital-leg-article1.1309835#commentpostform

Wednesday, April 24, 2013 -The City Council’s Committee on Health holds a hearing on Res 1738-2013, a resolution sponsored by City Councilmembers Brad Lander and Stephen Levin. The resolution’s title is “Resolution calling on the State University of New York and the New York State Department of Health to work with stakeholders to pursue the acquisition of Long Island College Hospital (LICH) by another health care institution to preserve critical health care services for the community, and to ensure that all resources gained from any sale or transfer of LICH assets are used exclusively for the preservation of these services; and authorizing the Speaker to file or join amicus briefs on behalf of the Council in support of the preservation of such services.” The vote is 10 to 0, with one member absent, in favor of the resolution. http://legistar.council.nyc.gov/MeetingDetail.aspx?ID=236902&GUID=F81782E9-8967-40109FE8-281A5E7454C1&Options=info|&Search=

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Thursday, April 25, 2013 -The City Council passes Res 1738-2013, the resolution calling for SUNY to find another operator to acquire LICH, by voice vote. http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=1419678&GUID=7269862A-018F4FE6-9A01-30ADDB6FCA1D&Options=&Search=

Friday, April 26, 2013 -SUNY Downstate issues a press release announcing that it is withdrawing its closure plan for LICH: SUNY Downstate Medical Center today withdrew from the New York State Department of Health (DOH) its proposed closure plan for Long Island College Hospital and said it would continue to seek a provider of healthcare services within the LICH community, including potentially a hospital operator. The press release continues SUNY’s claims that LICH is the reason for SUNY’s financial problems: “The financial conditions at LICH remain unchanged. LICH’s continued financial losses still threaten the viability of Downstate Medical and our world-renowned medical school. We are withdrawing the closure plan so we can work with the State and other stakeholders on a sustainability plan for Brooklyn’s only medical school and to ensure quality medical care throughout the borough. The current legal proceedings prohibit this dialogue,” said Downstate President Dr. John F. Williams, Jr. Note: although we have received this press release by e-mail, it does not appear, as of May 1, at SUNY’s press releases webpage.

Monday, April 29, 2013 -State Senator Daniel Squadron calls for LICH’s future to be determined by a process that includes community input: “Any decision on LICH’s future must include real input from the community and local leaders,” said state Sen. Daniel Squadron (D-Cobble Hill), a member of the Brooklyn delegation, which includes about 30 state senators, assembly and city council members. “That’s why we’re continuing to push for a working group that ensures collaboration and transparency in the process.” http://www.nydailynews.com/sit-down-set-state-officials-brooklyn-pols-long-island-collegehospital-fate-article-1.1330498

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Wednesday, May 1, 2013 -SUNY issues an RFI to solicit interest from a potential future operator of LICH. From the press release: The State University of New York today issued a public Request for Information (RFI) to formally solicit interest from hospital operators, healthcare providers, and qualified parties who could provide health care services, including operation of an acute care hospital, at or around the Long Island College Hospital (LICH) site in Brooklyn. SUNY issued this RFI to parties for the following: • Operation of health care facilities or services on the campus or in the community around the Long Island College Hospital • Development of the LICH campus for beneficial community purposes that may support health care services in the community • Provision of economic development in the neighborhood that may support health care services in the community • Other creative purposes that can be beneficial to the community including support of health care services in the community http://www.suny.edu/sunynews/News.cfm?filname=2013-05-01-LICHRelease.htm From the RFI itself: State University of New York (SUNY) on behalf of its Downstate Medical Center, is requesting expressions of interest from qualified parties who could provide health care services, including operation of an acute care hospital, at or around the Long Island College Hospital (LICH) site in Brooklyn. Any expression of interest must include operation of a health care facility or health services on all or part of the LICH campus, or in the community proximate to LICH, consistent with the health care needs of the community. SUNY may, but is not obligated to, initiate a competitive bidding process to respond to the expressions of interest. The information received from this Request for Information (RFI) may be used in the development by SUNY of a plan to achieve fiscal viability of the Downstate Medical Center (the Sustainability Plan). SUNY is required to develop the Sustainability Plan by June 1, 2013 and with the approval of the New York Department of Health and the New York Office of Budget, begin implementation on June 15, 2013. Copies of expressions of interest must be provided to the Department of Health. The RFI divides the LICH real estate into two categories: “Core Properties” and “Non-Core Properties”: Non-Core Properties In addition, the Polhemus Building is connected to the Henry Street Building via a walkway. This eight-story plus basement building contains 51,600 square feet and was built in 1850. The Polhemus Building is used mostly for hospital administration and

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physician offices and contains a fair amount of vacant and unusable space (i.e. the two amphitheatres). The Polhemus Building is situated on approximately 6,834 square feet. SUNY’s interest in unloading LICH is described this way: SUNY and certain entities related to SUNY collectively acquired the LICH healthcare services operation from Continuum Health Partners (CHP) in 2011. SUNY has operated LICH with significant annual deficits, and therefore, wishes to divest itself from the LICH operations. Other real-estate and legal facts about SUNY’s ownership of LICH are explained in the RFI: All real estate and property, fixtures, plant and equipment at the LICH campus are held by Downstate at LICH Holding Company, Inc. (DLHC), a New York not-for-profit corporation of which SUNY is the sole member. The real property comprising the LICH campus is further described on the attached Exhibit A. DLHC leases the LICH campus to SUNY under a long-term lease. Staff of the hospital facility, with the exception of physicians, is employed through a limited liability company, Staffco of Brooklyn, LLC, Inc., of which the sole member is the Health Science Center at Brooklyn Foundation, Inc. Some of the LICH campus is subleased to various physicians and other third parties. Other LICH facts provided by the RFI: Located in the Cobble Hill section of Brooklyn, the SUNY LICH campus is certified for inpatient capacity of 506 beds including adult, neonatal, and pediatric intensive care, maternity, and psychiatry. Presently, approximately 275 beds are operational. The Hospital provides services to the northwestern section of Brooklyn including Downtown Brooklyn, Brooklyn Heights, Red Hook, Bedford Stuyvesant, Williamsburg, and Crown Heights. This area includes approximately 460,000 residents. In addition to the ambulatory care and emergency services at the primary LICH campus, SUNY LICH operates four school based clinics in the nearby area. The outpatient services include primary and specialty care and behavioral health services. In 2011, approximately 14,000 inpatients were discharged from the LICH hospital facility, the majority of whom were publicly insured (approximately 70%) through Medicare or Medicaid. The SUNY LICH campus is also licensed for EMS ambulance services and currently has nine ambulances on site. The LICH hospital participates in the graduate medical education programs of UHB and serves as a training site for nursing and allied health students. These are the services that LICH provides, according to SUNY’s RFI. Any argument about the future of LICH should take into account what services LICH provides as of May 2013: Services at LICH Campus Inpatient Services: • Coronary care

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• Intensive Care • Maternity • Medical/Surgical • Neonatal Continuing Care • Neonatal Intensive Care • Neonatal Intermediate Care • Pediatrics • Pediatric ICU • Physical Medicine and Rehabilitation • Licensed OMH Adult Inpatient Psychiatry Outpatient Services: • Emergency Department • Rehabilitation Therapy • OMH Licensed Article 31 Mental Health Clinic Services • Ambulatory Surgery • Primary and Specialty Care • Prenatal and Family Planning • Ambulance Services The time to submit questions about the RFI is brief: Respondents may submit questions related to this RFI by 3:00 pm ET on Wednesday, May 15, 2013 via hand delivery, regular mail, express carrier, or fax to the contacts named at the end of this RFI. The RFI does not define the nature of the transaction or relationship: C. Transaction Structure 1. Describe the legal structure of the proposed transaction (i.e., affiliation, joint venture, asset purchase, merger, etc.) The deadline for the RFI: May 22, 2013. The RFI is clear about some things it will not do: This RFI will not be used to evaluate, rank or select vendors, nor will it be used to prequalify or screen vendors for a subsequent competitive bidding process, if any. No contract will be awarded based on this Request for Information or any of the responses received. http://www.suny.edu/hospitals/downstate/Downstate-RFI.pdf

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PROPOSED LEGISLATION
In January 2013 Governor Cuomo proposed legislation to allow for-profit corporations to operate a hospital in Brooklyn. Although blocked in the NYS Assembly, Cuomo remains interested in revisiting the legislation: Richard Azzopardi, a spokesman for the governor, said, “We continue to have an interest in exploring this and any other option that will promote access to capital for the improvement of health care facilities.” http://www.nytimes.com/2013/03/27/nyregion/new-york-state-budget-drops-plan-to-allow-forprofit-investment-in-hospitals.html

Crain’s reported on the bill on January 25, 2013: Tucked into the governor's executive budget is legislation enabling two business corporations affiliated with an academic medical center—one in Brooklyn and one upstate—to operate a hospital or hospitals in Brooklyn. The pilot program managed by the state Department of Health is meant to entice entities that otherwise would have nothing to do with the New York market and its restrictive health care regulations. The pilot would "assist in restructuring health care delivery systems by allowing for increased capital investment in health care facilities," according to the state budget. These business corporations—either for-profit or nonprofit—could use their capital and expertise to change the way health care is delivered in Brooklyn, creating a network instead of a delivery system heavily dependent on hospitals. Could an entity such as the Cleveland Clinic run SUNY Downstate and find the capital to keep Long Island College Hospital afloat? As conceived, the pilot program could explore a range of options. The budget language is meant to open the door to new approaches. http://www.crainsnewyork.com/article/20130125/PULSE/130129932

The bill in question is S2606-2013: Amends various provisions of law relating to implementing the health and mental hygiene budget for the 2013-2014 state fiscal year. http://m.nysenate.gov/legislation/bill/S2606-2013

Pages 197-199 of the bill describe the pilot program:
Section 2801-a of the public health law is amended by adding new subdivision 18 to read as follows: a

18. (A) THE COMMISSIONER IS AUTHORIZED TO ESTABLISH A PILOT PROGRAM TO ASSIST IN RESTRUCTURING HEALTH CARE DELIVERY SYSTEMS BY ALLOWING FOR

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LICH Factbook Prepared by the Cobble Hill Association INCREASED CAPITAL INVESTMENT IN HEALTH CARE FACILITIES. PURSUANT TO THE PILOT PROGRAM, THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL SHALL APPROVE THE ESTABLISHMENT, IN ACCORDANCE WITH THE PROVISIONS OF SUBDIVI SION THREE OF THIS SECTION, OF NO MORE THAN TWO BUSINESS CORPORATIONS FORMED UNDER THE BUSINESS CORPORATION LAW, ONE OF WHICH SHALL BE THE OPERATOR OF A HOSPITAL OR HOSPITALS IN KINGS COUNTY AND ONE SHALL BE S. 2606 3006 ELSEWHERE IN THE STATE. SUCH BUSINESS CORPORATIONS SHALL AFFILIATE, THE EXTENT OF THE AFFILIATION TO BE DETERMINED BY THE COMMISSIONER, WITH AT LEAST ONE ACADEMIC MEDICAL INSTITUTION APPROVED BY THE COMMISSIONER. (B) NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, BUSINESS CORPORATIONS ESTABLISHED PURSUANT TO THIS SUBDIVISION SHALL BE DEEMED ELIGIBLE TO PARTICIPATE IN DEBT FINANCING PROVIDED BY THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK, LOCAL DEVELOPMENT CORPORATIONS AND ECONOMIC DEVELOPMENT CORPORATIONS. (C) THE FOLLOWING PROVISIONS OF THIS CHAPTER SHALL NOT APPLY TO BUSI NESS CORPORATIONS ESTABLISHED PURSUANT TO THIS SUBDIVISION: (I) PARA GRAPH (B) OF SUBDIVISION THREE OF THIS SECTION, RELATING TO STOCKHOLD ERS; (II) PARAGRAPH (C) OF SUBDIVISION FOUR OF THIS SECTION, RELATING TO THE DISPOSITION OF STOCK OR VOTING RIGHTS; (III) PARAGRAPH (E) OF SUBDI VISION FOUR OF THIS SECTION, RELATING TO THE OWNERSHIP OF STOCK; AND (IV) PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION FOUR THOUSAND FOUR OF THIS CHAPTER, RELATING TO THE OWNERSHIP OF STOCK. NOTWITHSTANDING THE FOREGOING, THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL MAY REQUIRE THE DISCLOSURE OF THE IDENTITY OF STOCKHOLDERS, PROVIDED THAT THE NUMBER OF STOCKHOLDERS DOES NOT EXCEED THIRTY-FIVE. (D) THE CORPORATE POWERS AND PURPOSES OF A BUSINESS CORPORATION ESTAB LISHED AS AN OPERATOR PURSUANT TO THIS SUBDIVISION SHALL BE LIMITED TO THE OWNERSHIP AND OPERATION, OR OPERATION, OF A HOSPITAL OR HOSPITALS SPECIFICALLY NAMED AND THE LOCATION OR LOCATIONS OF WHICH ARE SPECIF ICALLY DESIGNATED BY STREET ADDRESS, CITY, TOWN, VILLAGE OR LOCALITY AND COUNTY; PROVIDED, HOWEVER, THAT THE CORPORATE POWERS AND PURPOSES MAY ALSO INCLUDE THE OWNERSHIP AND OPERATION, OR OPERATION, OF A CERTIFIED HOME HEALTH AGENCY OR LICENSED HOME CARE SERVICES AGENCY OR AGENCIES AS DEFINED IN ARTICLE THIRTY-SIX OF THIS CHAPTER OR A HOSPICE OR HOSPICES AS DEFINED IN ARTICLE FORTY OF THIS CHAPTER, IF THE CORPORATION HAS RECEIVED ALL APPROVALS REQUIRED UNDER SUCH LAW TO OWN AND OPERATE, OR OPERATE, SUCH HOME CARE SERVICES AGENCY OR AGENCIES OR HOSPICE OR HOSPICES. SUCH CORPORATE POWERS AND PURPOSES SHALL NOT BE MODIFIED, AMENDED OR DELETED WITHOUT THE PRIOR APPROVAL OF THE COMMISSIONER. (E) (1) IN DISCHARGING THE DUTIES OF THEIR RESPECTIVE POSITIONS, THE BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND INDIVIDUAL DIRECTORS AND OFFICERS OF A BUSINESS CORPORATION ESTABLISHED PURSUANT TO THIS SUBDIVI SION SHALL CONSIDER THE EFFECTS OF ANY ACTION UPON: (A) THE ABILITY OF THE BUSINESS CORPORATION TO ACCOMPLISH ITS PURPOSE; (B) THE SHAREHOLDERS OF THE BUSINESS CORPORATION; (C) THE EMPLOYEES AND WORKFORCE OF THE BUSINESS; (D) THE INTERESTS OF PATIENTS OF THE HOSPITAL OR HOSPITALS; (E) COMMUNITY AND SOCIETAL CONSIDERATIONS, INCLUDING THOSE OF ANY COMMUNITY IN WHICH FACILITIES OF THE CORPORATION ARE LOCATED; (F) THE LOCAL AND GLOBAL ENVIRONMENT; AND (G) THE SHORT-TERM AND LONG-TERM INTERESTS OF THE CORPORATION, INCLUD ING BENEFITS THAT MAY ACCRUE TO THE CORPORATION FROM ITS LONG-TERM 198 A.

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LICH Factbook Prepared by the Cobble Hill Association PLANS. (2) THE CONSIDERATION OF INTERESTS AND FACTORS IN THE MANNER REQUIRED BY PARAGRAPH ONE OF THIS PARAGRAPH: (A) SHALL NOT CONSTITUTE A VIOLATION OF THE PROVISIONS OF SECTION SEVEN HUNDRED FIFTEEN OR SEVEN HUNDRED SEVENTEEN OF THE BUSINESS CORPO RATION LAW; AND (B) IS IN ADDITION TO THE ABILITY OF DIRECTORS TO CONSIDER INTERESTS AND FACTORS AS PROVIDED IN SECTION SEVEN HUNDRED SEVENTEEN OF THE BUSI NESS CORPORATION LAW. S. 2606 3006 (F) A SALE, LEASE, CONVEYANCE, EXCHANGE, TRANSFER, OR OTHER DISPOSI TION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE CORPORATION SHALL NOT BE EFFECTIVE UNLESS THE TRANSACTION IS APPROVED BY THE COMMISSIONER. (G) NO LATER THAN TWO YEARS AFTER THE ESTABLISHMENT OF A BUSINESS CORPORATION UNDER THIS SUBDIVISION, THE COMMISSIONER SHALL PROVIDE THE GOVERNOR, THE MAJORITY LEADER OF THE SENATE AND THE SPEAKER OF THE ASSEMBLY WITH A WRITTEN EVALUATION OF THE PILOT PROGRAM. SUCH EVALUATION SHALL ADDRESS THE OVERALL EFFECTIVENESS OF THE PROGRAM IN ALLOWING FOR ACCESS TO CAPITAL INVESTMENT IN HEALTH CARE FACILITIES AND THE IMPACT SUCH ACCESS MAY HAVE ON THE QUALITY OF CARE PROVIDED BY HOSPITALS OPER ATED BY BUSINESS CORPORATIONS ESTABLISHED UNDER THIS SUBDIVISION. 199 A.

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