Hudson Valley hospital warns it may cut services. NY calls warning 'misinformation.'

A Hudson Valley hospital system and Gov. Kathy Hochul's administration are battling over the use of state taxpayer funds to support health care in New York.

Westchester Medical Center Health Network released statements recently that warned it would impose major service cuts at its HealthAlliance Hospital in Kingston — unless it received a state bailout to help close a $24 million budget gap it projected for next year.

The Westchester County-based network, known as WMC Health, asserted it needed the tax dollars primarily due to unforeseen pandemic-era financial strains, which exceeded projections of a government funding deal it struck in 2019 with the state to consolidate two hospital campuses in Kingston into the current HealthAlliance facility.

But Hochul's team asserted the network appeared to have sufficient funds to avoid service cuts at HealthAlliance hospital. That included $160 million in state taxpayer dollars the network received over the past five years, the governor's office noted.

The hospital network overall also remained on track to end this year with $109 million in cash, including the cost of tens of millions of dollars paid to top executives, Hochul's office added.

"Sadly, the misinformation campaign being waged by the hospital system’s leadership puts dollars above employees, patients and the well-being of the Hudson Valley Region," Hochul spokesman John Lindsay said in a statement.

How much taxpayer support does HealthAlliance get?

The bailout showdown comes about a year after members of Hochul's administration posed with WMC Health executives at a ribbon cutting for HealthAlliance Hospital's renovation project.

That project was funded in part with $88.8 million through the state Capital Restructuring Financing Program.

HealthAlliance’s finances also appeared stable earlier in the pandemic as billions of dollars in federal aid flowed to New York health providers. The hospital reported operating surpluses of about $5 million and $39 million in 2020 and 2021, respectively, the latest federal tax records show.

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About $180 million in federal pandemic aid flowed to WMC Health's flagship hospital, Westchester Medical Center, early in the global crisis, while HealthAlliance hospital got about $15 million, USA TODAY Network reported last year.

At the same time, some WMC Health executives have consistently ranked among the highest-paid in the state, including President and CEO Michael Israel, who had total compensation of nearly $3.5 million in 2021, up about 22% from the prior year, the most recent federal records show.

Last week, WMC Health asserted the budget shortfalls at HealthAlliance were so severe it could struggle to pay the hospital's employees in the future.

The health network’s plan to make service cuts at HealthAlliance also stands in contrast to its investments in the Valhalla-based Westchester Medical Center, which recently embarked on a $221 million expansion project.

What WMC Health says about 'misinformation' claim

In a statement to USA TODAY Network on Monday, WMC Health described the Hochul administration's comments on the situation as attempts to "avoid accountability and deflect responsibility by making irrelevant and personal attacks about executive pay."

The health network asserted it met and exceeded the terms of its 2019 deal with the state, including investing more than $70 million into HealthAlliance over the last two years. By contrast, the state has "refused to make good on this year’s contribution to that plan," the network added.

Hochul's office asserted the state has "far exceeded" its nearly $105 million funding commitment to WMC Health in the 2019 deal.

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The bailout request from WMC Health seeks to reopen negotiations with the state to secure a two-year extension on the funding and performance-related deadlines of the 2019 deal.

Both WMC Health and Hochul's office suggested they are open to resuming negotiations over the apparent stalemate, which offered a glimpse into the political sausage-making prior to state budget debates kicking off in January.

Is NY health consolidation working?

The prospect of a Hudson Valley hospital struggling to make payroll raises questions about the benefits of a massive wave of health care consolidation in New York over the past decade.

For example, WMC Health has taken over numerous hospitals and health providers during that period, spanning facilities across Rockland, Orange, Ulster and Dutchess counties. The expansion unfolded as the network aimed to keep pace with a growing list of New York City-based health networks taking over hospitals and health providers across the Hudson Valley.

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The health care consolidation battles in New York stemmed, in part, from state and federal measures that incentivized hospital takeovers, with the largest changes sparked by the Affordable Care Act approval in 2010.

Since then, New York's medical arms race has seen historic investments in hospital construction and cutting-edge medical devices. But the spoils have disproportionately flowed to flagship medical centers and massive hospitals, fueling ever-increasing executive compensation and risky offshore investments by some health systems.

At the same time, the largest and most financially stable hospitals in New York got the biggest chunk of initial federal pandemic bailouts in 2020, while some smaller community hospitals struggled and cut services.

Today, WMC Health is a 1,700-bed health care system with nine hospitals across the Hudson Valley. Overall, it has more than 13,000 workers and has nearly 3,000 attending physicians, the network website says.

This article originally appeared on Rockland/Westchester Journal News: Kingston hospital warns of service cuts. Hochul: That's 'misinformation'