Lakewood Hospital

Lakewood Finance Director Jennifer Pae puts the loss to the city's general fund at nearly $1.7 million from the proposed closure of Lakewood Hospital.

(File photo)

LAKEWOOD, Ohio - Lakewood Hospital's closing would cost the city's general fund about $1.5 million to $1.7 million dollars annually, city Finance Director Jennifer Pae wrote in a letter to city officials released Monday.

The loss represents about 4 percent of general fund revenues, Pae wrote.

"Although this may sound daunting, it is not insurmountable or devastating to the city government," Pae wrote.

Her conclusions were contained in an "estimated financial impact" memo, which followed an earlier estimate by Mayor Michael Summers, who said the loss to the city would be about $1.5 million annually.

If Lakewood Hospital closes in September 2016, as called for under a proposal by the Cleveland Clinic and Lakewood Hospital Association, the clinic would end lease payments of about $1.2 million annually to the Lakewood Hospital Fund. The fund is separate from the general fund. However, the loss would mean expenses currently paid out of the hospital fund would shift to the general fund.

The hospital fund has been paying about $750,000 annually for salaries and benefits for seven firefighters and paramedics. In addition, the fund paid $205,000 annually to the Cuyahoga County Health Department for services. Those expenses would transfer to the general fund.

In addition, the city would lose income taxes paid by the 1,100 employees of Lakewood Hospital. A new Cleveland Clinic family health center and emergency department, which would be built in place of the hospital, would employ an estimated 250 workers. The change would mean a loss of about $735,000 in city income taxes, Pae estimated.

The total loss is $1.69 million. While the financial loss is challenging, Pae said it is not unprecedented. She said the city faced difficult financial times in 2007, but it has since rebounded.

"The city has recently successfully addressed larger financial challenges of reduced revenues and increased expenditures, while maintaining/improving services, not raising any taxes, and improving the city's financial position," Pae wrote.

Economic development needs to be the city's top priority, Pae wrote. Filling empty office buildings and developing the 4 acres of land the city will have available once the hospital is demolished could provide additional money, she wrote.

She also said the city should look for additional savings, including reducing health care costs through wellness and prevention programs, maintaining or reducing city employees through attrition, and seeking energy cost reductions.

City Council is reviewing the proposed agreement to close Lakewood Hospital. It's approval would be necessary before the plan could move forward.

City Councilman Sam O'Leary on Monday said he would request the city conduct an economic impact study to determine how the closing of the hospital might affect downtown stores and restaurants.

Plans call for Lakewood Hospital to remain open until a new Cleveland Clinic hospital in Avon opens in September 2016. It would be the clinic's first hospital in Lorain County.

During a Jan. 28 public meeting, Lakewood Hospital Association President Tom Gable said the decision to close Lakewood Hospital while simultaneously opening the hospital in Avon were unrelated decisions. His comment drew groans from the audience.

Another public forum is scheduled for Wednesday at 7 p.m. at City Hall in the second-floor auditorium.

See the finance director's letter below this story.

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