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Health board unanimously approves Hoboken hospital transfer

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The state health planning board Thursday afternoon voted 5-0 to approve the transfer of Hoboken University Medical Center to HUMC Holdco, the group that owns Bayonne Medical Center, over the objections of the state's health insurance industry, a public interest law center and the hospital nurses' union.

The matter now goes before Health Commissioner Mary O'Dowd, who has the final say in whether or not HUMC can assume control of the city-owned hospital.

The city endorses the deal, which gets Hoboken out from under its $51.6 million bond debt on the hospital. The Hoboken Municipal Hospital Authority has repeatedly warned that unless the deal goes through, the hospital will close.

A staff report recommended last week that the board approve the transfer, concluding that the move "is in the best interests of the residents in Hudson County."

Appleseed, a public interest law center, had urged rejection of the transfer, and said Hoboken UMC "must be placed in the hands of a nonprofit operator that is legally able to place the health care needs of Hoboken and Hudson County residents first — not the financial interests of the principal investors of HUMC Holdco and Medical Properties Trust."

Medical Properties has disclosed it has agreed to invest $75 million in Hoboken UMC, with Medical Properties acquiring the hospital's real estate and leasing it back to its operators. Medical Properties said the deal includes a capital infusion into the hospital through a $20 million working capital loan and a $5 million convertible note.

In testimony today, Daniel Kane, CEO of Bayonne Medical Center, testified that his hospital received $4.9 million in charity-care reimbursements in both 2008 and 2009. While he said he didn't have figures for 2010, he said the hospital's owners, in partnership with another party, have developed a federally qualified health center that is now caring for some of the charity volume.

"In addition, we do health fairs and screenings in Bayonne, and we are invited by church groups in Jersey City to provide health fairs," he said.

But Judy Donlen, chair of the state health planning board, told Kane her records indicate declining charity care admissions at Bayonne Medical: 664 admissions in 2008 fell to 566 the next year, and to 500 in 2010.

"I really can't explain the decline," Kane said, but added that it may be because more people are using the health center.

"We take patients whether they are insured or charity patients," he said. "We do not turn anyone away."

Bayonne Medical is out of network with all providers except Amerihealth. They do admit patients who have out-of-network benefits that allow them to use facilities like Bayonne, and Kane said the hospital does bill patients for some co-pays and other charges.

Health insurers oppose the deal, citing Bayonne Medical Center's decision to operate out of network, rather than entering into contracts with insurers. Bayonne has increased its fees since going out of network several years ago, according to insurers, who in some cases have gone to court to oppose Bayonne's out-of-network rates. The New Jersey Association of Health Plans said in written testimony that HUMC Holdco has announced its intention to refuse to honor Hoboken UMC's current contracts with major insurers.

Phillip Schaengold, chief transition officer for HUMC Holdco, today said, "We are currently in negotiations with all the health insurance plans," including Horizon Blue Cross Blue Shield, Aetna and Cigna. While he's optimistic HUMC Holdco will reach agreements with providers, a representative for the New Jersey Association of Health Plans disputed that view, and said there are no serious negotiations taking place.

Joseph F. Scott, CEO of Jersey City Medical Center, said in testimony today that he's seen a significant increase in charity care at his hospital since Bayonne became a for-profit care center. Jersey City gets about $48 million in reimbursements for charity care and Medicaid — about 80 percent of the cost of care delivered, he said.

In the case of the for-profit hospital, "they want to make a profit, and they don't make a profit on charity care or Medicaid — so they're going to want to push all those patients over to my hospital," he said.

Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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