Residents and St. Mary Hospital employees packed the Hoboken City Council chambers in City Hall Wednesday night to beg local officials to do what they could to keep the city’s only hospital open.
It was announced two weeks ago that the hospital, which opened in 1863, is in jeopardy of closing unless the owner, Bon Secours Health Care System, can find a buyer.
Mayor David Roberts told the attentive crowd that keeping St. Mary open is high priority of his administration. St. Mary has over 1,000 employees, and about half of them live in Hoboken.
“We are now speaking with one voice,” Roberts said. “There is reason to be hopeful, because the community, our government officials, historians, doctors, nurses, staff, residents of Hoboken, members of the clergy – everyone who cares about the great city of Hoboken has all joined in this cause.”
But while the will of the community and local government is vociferous, there is the financial reality that the hospital is losing money.
Anyone taking over the hospital will have to have a financial plan to keep it solvent in the long term.
On life support
Bon Secours, a Catholic health care system based in Marriottsville, Md., bought St. Mary Hospital in 2000. Soon after, they formed a partnership with Canterbury Health, the company that owns Christ Hospital in Jersey City. But that union fell apart in 2004, and the hospital was put up for sale.
For over a year, Bon Secours has been negotiating exclusively with the University of Medicine and Dentistry of New Jersey, based in Newark. But recently, a financial scandal hit UMDNJ. That hospital made a deal with the U.S. Attorney’s Office to avoid a criminal fraud prosecution, acknowledging that it deliberately defrauded the federal and state Medicare and Medicaid programs.
Two weeks ago, it was announced that UMDNJ had pulled out of negotiations for St. Mary, leaving Bon Secours to file a Certificate of Need application from the New Jersey Department of Health to close acute care services at the hospital over the next 12 months.
UMDNJ may reconsider
On Wednesday, the Hoboken City Council voted to approve a non-binding resolution encouraging UMDNJ to re-enter negotiations.
“Undoubtedly, this is as colossal a challenge as we have ever been presented with,” Councilman Peter Cammarano said. “It is incumbent on us as a government to respond to this challenge.”
State Sen. Bernard Kenny (D-Hoboken) talked to U.S. Attorney General Christopher Christie and said he was told that the U.S. Attorney’s office would not interfere if UMDNJ does want to re-enter negotiations.
“The U.S. Attorney has endorsed the concept that there should be further discussions,” Kenny said.
Michael Drewniak, as spokesperson for the U.S. Attorney’s office, said that UMDNJ is “free to pursue or not pursue the acquisition of St. Mary as they deem fit.”
He added that in the end, “it’s a business decision that’s up to UMDNJ.”
On Wednesday, during a City Hall meeting that Mayor David Roberts arranged with UMDNJ officials, UMDNJ said that it will re-enter talks with Bon Secours.
“We are always interested in helping the community in any way possible, but any assistance would have to be within reasonable financial parameters and would have to go before the Board of Trustees,” said Anna Farneski, a spokeswoman for UMDNJ, in a statement.
Roberts responded that, “It seems like we are getting close for an arrangement to get UMDNJ back on board. There is still much to do but this is a substantive first step.”
Employees speak up
Susan Cleary, Secretary Treasurer of District 1199J of the National Union of Hospital and Health Care Employees, said at Wednesday’s council meeting that it’s important to consider the total economic impact of closing the hospital.
“It’s pretty emotional when 1,200 people might lose their jobs, but this goes beyond even [the hospital employees],” Cleary said. “The pharmacy across the street will not stay in business, the restaurants and all the businesses around the hospital that depend on the patients, visitors and hospital staff will close. It will be an economic disaster for this city.”
She added that the employees must be vigilant until there are assurances that the hospital will remain open. “We must stay the course,” she said. “It’s been my experience that in these types of situations, especially with St. Francis [the Jersey City hospital Bon Secours recently closed], we have seen things get fast tracked, where before you know it the doors are shut, and we’re scratching our heads wondering what the hell happened.”
Where to get the money?
But while most in the community want the hospital to stay open, the biggest problem is that St. Mary is losing money, and lots of it.
According to a statement released by Bon Secours, since the company took over the hospital in January of 2000, they have provided loans to St. Mary for in excess of $118 million to fund operating losses.
The hemorrhaging of money has gotten worse recently, said Bon Secours officials. In fiscal year 2005, the hospital lost an estimated $27 million, and in the first quarter of the current fiscal year, which began Sept. 1, the hospital lost between $2 million and $3 million per month.
At this pace, according to the statement, St. Mary would stand to lose $35 million this fiscal year.
38 percent occupancy
The hospital’s biggest problem, according to Bon Secours, is that it is only at 38 percent occupancy, and a significant percentage of those patients are poor.
Kenny said that the government and hospital officials must develop a road map.
“Our first priority has to be to develop a financial plan that will make the hospital solvent over the long haul,” Kenny said.
He added that the hospital can return to profitability if UMDMJ comes in as a public teaching hospital, which would provide additional staffing and services. Since UMDNJ is itself a public teaching hospital, it would be eligible for $27 million in federal funds, which could be used to offset operating losses over the next year while the hospital restructures to render itself profitable.
According to Kenny, only the governor has the authority to release those funds.
Also, according to Hudson County Freeholder Maurice Fitzgibbons, the Hudson County Improvement Authority will consider bonding to help pay for capital improvements to the aging buildings. That money could go toward building a much needed new emergency room.
According to Kenny, it would take a bare minimum of $25 million in improvements to the facilities to bring the hospital up to state-of-the-art standards.
Kenny added that a permanent plan to save the hospital cannot be effected without Gov. Jon Corzine’s approval and support.
“The burden is on us to prove to the governor that this is financially doable and that we have a clear and realistic plan to make it happen,” Kenny said. “You can’t rely on $25 million in federal money every year to cover operating costs.”