A brewing fiscal crisis at One Brooklyn Health, which has received more than $1 billion in turnaround funding from the state, raises the question of whether that money has been well spent.

As first reported by Politico, One Brooklyn’s board of dIrectors voted this month not to renew the contract of its CEO, LaRay Brown – citing what the board president described as a $600 million deficit in the organization’s 2023 budget.

Brown said the projected deficit was closer to $500 million – which she acknowledged was “nothing to sneeze at” – but denied that it was the result of mismanagement on her part.

“The reality is that One Brooklyn, like other safety-net hospitals, has well-documented challenges in terms of financing,” Brown told Crain’s New York.

But One Brooklyn also has an unusual advantage: Since its founding in 2016 – at the urging of the Cuomo administration – the network has benefited from a gusher of financial aid from Albany, including a $634 million capital grant and hundreds of millions more per year in annual operating subsidies.

The goal of that spending was to reorganize and improve health-care delivery for a swath of the city’s largest borough. The plan, as proposed in a state-commissioned study, was to merge three financially struggling hospitals – Brookdale, Interfaith and Kingsbrook – and consolidate their underused inpatient facilities while investing in expanded primary care.

For the plan to work, One Brooklyn’s leaders needed to bring their revenue in line with expenses by attracting more patients, cutting costs or both.

A review of financial reports indicates that the opposite has happened.

Over the past five years, the system’s combined revenue from patients has continued to erode, declining 18 percent. Meanwhile – despite some recently announced cost-cutting moves – overall expenses climbed 7 percent (see chart). By 2021, One Brooklyn was relying on temporary state subsidies and other non-patient income for almost half of its revenue, the highest share of any hospital in New York.

Source: CMS

During that same period, meanwhile, the system’s net liabilities increased 40 percent to $660 million, the largest accumulated debt of any non-government hospital statewide.

Improving quality of care has also been a challenge. The system’s anchor hospital, Brookdale Medical Center, still gets the lowest possible rating of one out of five stars from the federal government’s consumer report card. (Interfaith and Kingsbrook are no longer separately rated, suggesting that their results have been consolidated with Brookdale’s.)

These disappointing results have been expensive for taxpayers. State lawmakers have authorized up to $700 million in capital funding, of which $213 million had been spent as of early this year. From 2015 through 2019, One Brooklyn also received $1.1 billion from an operating aid pool for distressed hospitals, which was 37 percent of the statewide total.

Earlier this year, the state allocated the system another $315 million in operating aid through March 2025.

Even with those millions, the system is running in the red.

For 2023, One Brooklyn reportedly faces a shortfall of either $500 million (according to Brown) or $600 million (according to the board president, Alexander Rovt). It has not been clear from press reports whether these estimates refer to an “operating” deficit, which is the gap between patient revenue and expenses, or the overall bottom line, after factoring in state aid, federal pandemic relief and other non-patient income.

The former scenario would be roughly consistent with the system’s performance in 2021, when it had an operating deficit of just over $600 million.

The latter scenario would be an even more serious crisis – and one of the largest losses a New York hospital has ever sustained.

Either way, the situation warrants urgent attention from state officials.

They need to assure that the public’s money is being use to improve the health-care system of Brooklyn and not just to postpone hard decisions or prolong an unsustainable status quo.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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