September 26, 2005

COUNTY COMMITS $57 MILLION TO
WESTCHESTER MEDICAL CENTER TO SHORE UP INSTITUTION'S FINANCES DURING TURNAROUND

Commitment of Funds Intended As Strong Message of Support and Encouragement to the Medical Center Community

In a 16-1 vote, the County Board of Legislators approved a $57 million cash infusion to Westchester Medical Center. The funds, which will be paid in monthly increments, will help defray operational expenses while hospital management continues to implement an aggressive financial turnaround plan. The approved funds are in addition to the over $30 million the County provided the Medical Center over the last three years.

"This infusion of cash means that the Medical Center can continue to operate without having the threat of a cash flow crisis causing it to close," said County Legislator Bill Ryan (D-WF, White Plains), Chair of the County Board. "Prior fiscal management brought the Medical Center to a point of near fiscal collapse. The new management team is turning the business side of the hospital around and the County is helping that effort by providing the hospital with the breathing room it needs to see its improvements and enhancements take root."

Ryan noted that new policies, procedures and state-of-the-art technology introduced by the hospital's current management team are controlling costs, increasing revenues and improving the Medical Center's ability to report and project its finances more reliably. A new accounting general ledger system and an accounts payable system have tightened control over expenses.

County Legislator Michael Kaplowitz (D, Somers), Chair of the Budget & Appropriations Committee that signed out the legislation and who also chairs the Board's Oversight Subcommittee on the Medical Center, reiterated that the $57 million was raised at no cost to taxpayers by refinancing the County's tobacco bonds at more favorable rates. The "tobacco securitization bonds" originated from settlement proceeds from litigation against tobacco manufacturers and were originally sold in 1999.

"As I said when the County first floated this idea in June, this is smart refinancing,” Kaplowitz noted. “We took advantage of lower interest rates and freed up more funds than we originally projected would be available from the refinancing.” Originally, it was anticipated that the refinancing would bring $27 million, rather than the $57 million that it ultimately brought.

Kaplowitz continued, "There is perfect symmetry here. Tobacco companies paid out funds to muncipalities like Westchester as a way to reimburse counties for increased public health costs associated with smoking. It's appropriate that these tobacco moneys find their way back to our region's most important health care delivery system."

Both Ryan and Kaplowitz expressed frustration that the state and federal governments called on to help with the turnaround have failed to come through yet with financial support and that the County had to step into the breach and carry the financial burden of support alone.

"We need to remember that the Medical Center is a vital component of the region's health delivery system and we can’t allow it to fail,” Ryan said. “The hospital serves 3.5 million people in the seven-county Hudson Valley region. It handles the most complex cases referred by specialists and our community hospitals and has maintained its historic role of providing for the indigent. In addition, the Medical Center is a $1.1 billion engine for our area’s economy, employing over 3,000 people with a $260 million payroll and spending $250 million with local businesses. Of course, my legislative colleagues and I will continue to press both Albany and Washington to respond to the hospital’s request for help. Apathy is not an option here.”

By the terms of the legislation, the County's Commissioner of Finance will pay out the $57 million in installments only with the prior written approval of the Chairman of the Board of Legislators and the County Executive. This pre-approval is an important additional step in the oversight process.