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GLENS FALLS — Glens Falls Hospital averaged a profit of $3.6 million a year from 2008 until the billing crisis in 2017, according to its IRS filings.

It was in the black two-thirds of the time; while, in the years it finished in the red, its losses were small compared with the losses caused by its new billing system.

A nonprofit like the hospital can make a profit, but what distinguishes it from a for-profit company is what is done with the money. Ending the year in the black is generally considered a sign of stability and health for any organization.

Compared to other hospitals in the state, Glens Falls Hospital has done well financially.

That reality frustrates those who have been hurt by cutbacks in service from the hospital, particularly at Salem Medical Center. The Salem center is now open just two days a week, and no longer does any blood draws or rehab.

“I just want what’s best for Salem. I want the elderly to have blood draws. It’s important for them to have preventative care, and many of them just can’t get to Glens Falls Hospital,” said Salem Supervisor Sue Clary. “This has affected so many people.”

She ran the numbers and could not find any reason for the center to close. Hospital President and CEO Dianne Shugrue told her the center had a $250,000 deficit, but Clary then sought donations and donors gave the hospital more than that amount, she said.

Now, the hospital has told Salem it will close the center unless the town agrees to take over all maintenance for the building.

The penny-pinching would be difficult to endure in hard times. But Clary said it was infuriating when the hospital seems to be financially sound.

Even Shugrue seems to agree. Two weeks after saying she was struggling to keep the ER open, she published an ad saying that the hospital was financially fine.

“Our cash flow and balance sheet are strong, our debt is manageable, our expenses well controlled,” she wrote.

Financial data for the last decade confirms those claims.

Glens Falls Hospital financials, 2008-2017

The following figures are from IRS 990 forms from 2008 through 2017 for Glens Falls Hospital.

Year Profit/Loss
2008 -$5.1M
2009 -$942,014
2010 $4.48M
2011 $7.27M
2012 $3.3M
2013 $1.46M
2014 $6M
2015 -$651,426
2016 $2.9M
2017 -$34.18M

In 2012, 38 percent of the hospitals in the state were losing money, according to an analysis from the Empire Center. Glens Falls Hospital ended that year with a $3.3 million profit.

In 2016, 44 percent of the hospitals in the state lost money, according to the same analysis. But despite the launch of what would be a disastrous new billing program, Glens Falls Hospital posted a $2.9 million profit that year.

During that five-year time period, 75 percent of the hospitals in the state, including Glens Falls Hospital, experienced a decrease in the number of inpatients. More than half of those hospitals posted a deficit, but Glens Falls Hospital stayed in the black.

The hospital did have three bad years in the last decade. In 2008, the hospital recorded a loss of $5.1 million. The following year, things improved, but not enough: The hospital had a loss of $942,000.

After that, the hospital posted five straight years of profit, followed by one year with a $651,000 loss in 2015. In 2016, the hospital was in the black again.

But the hospital’s financial health is at odds with other statements from Shugrue, specifically her descriptions of it recently at a public meeting, when she said the hospital was at risk of closing.

“We’re fighting to keep the ER open,” she said. “Hospitals close. We don’t want to be one of them.”

She warned that, to keep the hospitable solvent, patients must keep coming there for MRIs, knee surgeries and other planned medical care.

“Not just when it’s an emergent situation, because if that’s the case, we may not be here,” she said.

The problem is Medicare reimbursement, she said.

“For every dollar we spend, we get 83 cents,” she said. “The Medicare margins are declining. We’re losing 10 percent on a Medicare patient.”

Medicare provides 69 percent of the hospital’s revenue.

The shortfall is so great that the hospital does not have the resources to make up for it, Shugrue said.

“The reimbursements must be improved,” she said in an ad in The Post-Star. The hospital is talking with state and federal elected official to push for changes, she said.

While many hospitals and medical professionals agree it's a challenge to handle Medicare and Medicaid rates, Glens Falls Hospital usually managed to balance its government income with revenue from other sources, including commercial insurance and income from investments in medical groups, according to its financial documents.

The reimbursement rate issue appears to be unrelated to the financial crisis the hospital faced in 2017 and 2018, when it posted large deficits.

An audit of the 2017 books, released by the hospital three weeks ago at The Post-Star’s request, showed that the hospital lost $38 million in 2017 because of problems with its new billing system.

Glens Falls Hospital finances

This chart, based on Glens Falls Hospital's audits, shows how much money (in medical bills) the hospital could not collect each year. It also shows how much it spent on services to Medicare patients, the shortfall after Medicare did not pay the full amount, and the percentage reimbursement rate from Medicare each year.

Costs 2014 2015 2016 2017
Uncollectable $9.5M $12.6M $16.3M $54.2M
Medicare costs $77.9M $85.8M $76.9M $97.7M
Medicare pay shortfall $7.7M $14M $12M $29M
Medicare pay rate 91% 84% 84% 70%

Shugrue has avoided talking about that issue, calling it a “one-time hit” caused by a “system conversion.” Until she was asked about a quote from the audit, she never described the loss as related to billing or as being caused by an ongoing problem rather than a one-time cost.

After The Post-Star detailed the issue, Shugrue admitted the problem went on for two years, or until November 2018. Employees and patients said the problem continued until at least June 2018.

It is not yet clear how much money in total was lost because of problems with the new system. The hospital has reached a settlement with Cerner, the IT company that provided the system, but the terms are private.

Shugrue has said the hospital had a budget deficit of $18.8 million in 2018, but that has not yet been independently confirmed.

She said that deficit reflected the cost of drawing more patients to the hospital.

“We brought in a big general surgery group, a big orthopedic group,” she said.

The hospital also vastly increased its spending in 2018 — buying its first MRI machine, spending $4.35 million to expand behavioral care and a crisis center, adding a new security and visitor management system, and making $4 million in salary increases “to ensure competitive compensation,” Shugrue said.

Cuts have been made in other areas, however.

Over the past two years, the hospital shed 850 jobs and closed several units. It sold the dialysis center and cut back on hours at some Washington County primary care centers, with Shugrue explaining that the hospital could no longer “subsidize” money-losers.

Most of the closures and cutbacks occurred in recent months, leading the public to ask about the hospital’s financial health. That’s when Shugrue held a public meeting and said Medicare reimbursement rates are too low to keep the hospital in the black.

At the same time, some patients were reporting that the hospital's billing system still wasn't functioning the way it should be.

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You can reach Kathleen Moore at 742-3247 or kmoore@poststar.com. Follow her on Twitter @ByKathleenMoore or at her blog on www.poststar.com.

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reporter - Health care, Moreau, Queensbury, South Glens Falls

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