How Mount Sinai Worked to Destroy Beth Israel Hospital

By Jeannine Kiely

The central argument of Mount Sinai Hospital’s most recent plan to close Beth Israel Hospital centers around their assertion that Beth Israel is on a path to lose $160 million this year, and that without closing Beth Israel, the whole Mount Sinai system will collapse. Besides the speciousness of a prediction that a four hospital system which grosses $24 billion a year is about to collapse (yes, $24,000,000,000), lies the fact that Mount Sinai has consciously set about to turn Beth Israel from a profit-making institution into a failing one.

As a member of the Community Coalition to Save Beth Israel Hospital and The New York Eye and Ear Infirmary group, I volunteered to do an analysis of Beth Israel’s publicly available financial records. I hold a BA in Economics from the University of California, Los Angeles and an MBA in Finance from Columbia Business School. For ten years, I worked in non-profit health care finance, including as a Director in the Health Care Group at Citibank. I provided financing and mergers and acquisition advisory services to not-for-profit healthcare companies, including structuring $6.9 billion in tax-exempt debt and derivative financings and advising on over $4 billion of financial transactions, including acquisitions, distressed asset sales and sale/leaseback deals.

I reviewed the last 20 years of Mount Sinai Beth Israel’s publicly available Form 990s and audited financial statements from Electronic Municipal Market Access, ProPublica materials, FY 2023 financial statements provided by Mount Sinai Health System (MSHS), and Medicare Cost Reports (2009-2022). I also reviewed MSHS’s New York State Department of Health Certificate of Need applications to eliminate or reduce services, in order to assess the effect of MSHS’s management decisions on Beth Israel’s financial health.

Following its acquisition of Beth Israel in October 2013, MSHS quickly began to remove services from Beth Israel and transfer them to Mount Sinai Hospital (MSH), the network’s flagship facility located on the Upper East Side, or Mount Sinai West, located in Midtown West (which used to be called Roosevelt Hospital). Services removed included cardiac surgery, maternity, neonatal care, pediatrics, chemical dependency and rehabilitation.

Specifically, in October 2015, MSHS decertified 31 chemical dependency beds. In August 2016, MSHS decertified 26 rehabilitation beds. In July 2017, MSHS decertified 25 pediatric beds, 31 neonatal beds, 42 maternity beds and all of cardiac surgery. In October 2019, MSHS converted five surgical beds to pediatric ICU beds and then transferred them to MSH. In March 2020, MSHS decertified 38 psychiatric and chemical dependency beds and after the Mount Sinai Behavioral Health Center opened in 2023, MSH moved 115 chemical dependency and psychiatric beds to the newly opened facility.

Over the same time period, net patient revenue at Beth Israel immediately began to suffer, dropping precipitously from $1,112,000,000 in 2013 to $725,000,000 in 2020, as reported in the audited financial statements for Beth Israel.

In addition to eliminating, moving and decertifying services away from Beth Israel, MSHS moved other operating revenue from the hospital.

Starting in 2015, the employed physicians in Beth Israel’s Faculty Practice Plan (FPP) “began a process of transitioning to the Mount Sinai Icahn School of Medicine (ISMMS) faculty practice plan, as detailed in the FY 2016 audited financial statements, note 1, page 15. The FPP is a revenue generating program that authorizes certain Mount Sinai faculty members to perform patient care and engage in professional consultation at qualifying hospitals within MSHS. In 2013 and 2014, FPP generated $174 million and $164 million in revenue for Beth Israel respectively, where 2014 was the last full year of recorded revenue prior to its removal.

After the 2013 acquisition, Physician Billing income moved from Beth Israel, based on the audited financial statements for FY 2014 to FY 2016, note 12. Physician Billing is an accounting line item that reflects the dollars collected for medical services or procedures rendered by individual physicians. Relocating that line item to ISMMS generates the impression that revenue from Physician Billing belongs exclusively to ISMMS, though the individual physicians may render those revenue generating services at either Beth Israel or ISMMS. In 2013, Physician Billing generated $19 million in revenue for Beth Israel. This was the last full year of recorded revenue prior to its removal.

In 2017, MSHS sold the Clinical Outreach Laboratory business of the former Continuum facilities used by Beth Israel. The sale generated a one-time gain of $65 million but subsequently resulted in a loss of more than $35+ million a year in revenue from Beth Israel. In 2013, Clinical Outreach Laboratory generated $38 million in revenue for the hospital and $35 million in 2014.

During the course of these accounting adjustments, service reductions and eliminations, Beth Israel’s operating net income declined precipitously. Operating net income was calculated by subtracting all operating expenses incurred from all revenue generated. In 2012, the last full year of Beth Israel’s financial data prior to acquisition by MSHS, the hospital recorded $20 million in operating net income. In 2023, after its last recorded decertifications, its operating net income plummets to a loss of $162 million.

The charts at left show the precipitous drop in income and the move from profitable to unprofitable.

Note that operating revenue actually increased in the 2021 to 2023 period, with little explanation about why net losses increased. Since October 2023 Beth Israel has been largely stripped of patients. Very few ambulances arrive and seriously ill patients are transferred elsewhere. All of this, of course has been done illegally, but Mount Sinai uses the damage they caused to bootstrap their argument that Beth Israel in an insolvent mess.

Frankly, their argument is duplicitous and self-serving. The executives are more interested in selling real estate than in serving the public in a community which will have lost its only full service hospital.

---

Jeanine Keily is one of the Democratic District Leaders for Soho and Tribeca.