Susquehanna Hospital Owes $1.3 Million to IRS

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

A local hospital faces a crushing tax bill as it tries to keep from drowning in red ink and the aftershocks of its debt could soon be felt from Scranton to the New York state line.

Barnes-Kasson Hospital is Susquehanna County's largest employer but its tax woes threaten jobs and possibly the quality of care.

Drive through Susquehanna Borough and you will see empty storefronts and some businesses barely hanging on, lining Main Street. People there call Barnes-Kasson, the hospital at the top of the hill, the touchstone keeping the community together.

It's where life-long borough resident Tracy Ball said she and her neighbors share life's defining moments. "I had my son at Barnes-Kasson," said Ball. "And I had a life-saving event happen there."

"It's one of the centerpieces of the community," added borough neighbor Lisa Macazan.

That centerpiece is in financial trouble.

"It's a crisis," said Charlie Aliano, Barnes-Kasson attorney and member of the hospital's board of directors. He said the federal and state Medicare and Medicaid programs denied or delayed payment of more than $2,000,000 to the hospital in 2009. That left Barnes-Kasson unable to pay the Internal Revenue Service some of the money taken from workers' payroll taxes.

"On the one hand, government is not paying us and on the other hand, government is demanding that we pay them," Aliano added, "and we don't have the money from government number one to pay government number two."

The crisis hit home this winter.

Money woes set in at a time when patients continued to need expensive care, doctors, nurses, and staffers needed to get paid and the hospital owed $1.3 million to the IRS, which was asking for penalties and interest, according to Aliano.

With staffing already thin, Barnes-Kasson looked for solutions. It chose not to lay off workers.

"Because if you did that, it would basically shut down the hospital," Aliano said. "Nurses would find other jobs. Doctors would relocate, my goodness!"

To make matters worse, the state cut a $400,000 yearly grant for the hospital's birthing center. It could force that center to close; a prospect nobody wants.

"In the middle of winter if somebody's having a baby they could be stuck in an ambulance on route 81 in a snowstorm, trying to get to Scranton," warned Barnes' attorney Aliano.

Those in the community who rely on the hospital said any threat to Barnes-Kasson threatens their own health.

"It's the closest, fastest area where you can get your medical taken care of," said resident Tracy Ball.

In the last month the money crisis eased. The hospital said Medicare agreed to pay a million dollars in reimbursements. That money is earmarked toward its IRS debt and the facility is paying the IRS an additional $100,000 a month to get out of tax debt.