The Troubling Downfall of a New York City Safety Net

The Troubling Downfall of a New York City Safety Net

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Doug Sauer, CEO of the New York Council of Nonprofits, says that the introduction of for-profit ventures is a response to larger problem in the nonprofit health and human services world. “Medicaid is cutting back considerably, and they’re trying to push the cost of managed care down to the agencies … . They’re really putting the squeeze on the providers,” Sauer says.

The restructuring of the state’s Medicaid system means that for organizations to continue providing services to the developmentally disabled and mentally ill, they have to increase their scale.

“The push has been merge, consolidate, have a cheaper administrative operation. So what do they do, they go out and try to find other ways to make money, they create these for-profits to try to subsidize what the government’s not paying them to do,” says Sauer, who sees this as bad news for the nonprofit community. “Medicaid is saying, you have to be lean and you can’t afford to have all these smaller nonprofits around. But as we see here, scale doesn’t necessarily do it. FEGS was not too big to fail.”

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