Miracle on 29th Street Bayonne Medical Center sale is complete

Two words described the saving of Bayonne Medical Center in Mayor Terrence Malloy’s mind: “a miracle.”

The sale of bankrupt Bayonne Medical Center to IJKG Opco LLC was finalized last week, ending a year-long saga of pain and doubt as city officials had joined with hospital officials, a host of employees, and Bayonne residents in a citywide effort to keep the facility open.

IJKG is spending about $33 million for the purchase and for absorbing a significant portion of the hospital’s prior debt, meeting the requirements imposed by the court.

Although BMC formally announced bankruptcy in March of 2007, the acute care facility had been in trouble for several years, with the closing of the maternity ward in August of 2006 as one of the most visible signs of the decline.

Malloy said the road back to recovery for the hospital often seemed mired in potential pitfalls, any one of which could have doomed the hospital.

Although the hospital has had a buyer since before the first of the year, the real challenge, Malloy said, was getting to the closing – partly because the hospital was losing as much as $600,000 a week.

Quick thinking

Thanks to quick thinking by City Councilmen Gary La Pelusa and Anthony Chiappone, the City Council passed a $6 million bond to help fund hospital operations until the sale concluded. Thus, the city was able to provide a $6 million band-aid to the hospital at the very moment the bankruptcy court was ready to close the hospital down earlier this year.

“If Gary hadn’t been in court that day, and he hadn’t offered the court the city’s money, the judge would have closed the hospital,” said Ruth Dugan, chair of the BMC Board of Directors.

City Council President Vincent Lo Re said the $6 million bond helped save nearly 1,000 hospital jobs, as well as numerous jobs associated with the hospital. But more importantly, the loan helped guarantee that Bayonne would retain an acute health care facility.

“We saw some very dark times,” Lo Re said. “The court was ready to close the hospital. We did what we could to help maintain the hospital.”

While the hospital will not repay the $6 million bond directly, the sale puts the hospital on the tax rolls for the first time, and the city will see $900,000 annually in additional taxes.

“That’s how the hospital will pay the city back, through taxes,” Lo Re said.

Everything lined up

Dugan believes the combined effort by thousands of people to save the hospital was the difference between Bayonne Medical Center’s staying open while other hospitals in the state were closed.

“We were one of three hospitals that went to court, and we’re the only one still open,” Dugan said.

This effort was not lost on Federal Bankruptcy Court Judge Morris Stern, who presided over the hearing.

“He came down off the bench and shook my hand,” Dugan said. “I believe he was moved by our efforts.”

While Dugan said finding a buyer to save the 278-bed hospital had been a challenge, the community had come together to become a powerful force.

“We were not going to let Bayonne Medical Center close,” she said.

Fortune also blessed BMC in other ways, Dugan said.

“It didn’t hurt that we had Joe Doria, who had a personal relationship with Gov. [Jon] Corzine,” Dugan said. “It also helped that Joe Doria became the commissioner of the Department of Community Affairs at a time when we needed approvals from the Local Finance Board.”

Doria, as commissioner, oversees that board.

“We are very lucky everything lined up. Otherwise, we might have been in big trouble,” Dugan said.

A turnaround plan is underway

Although the hospital began implementing a turnaround plan well before the sale was complete, bankruptcy had prevented the hospital from taking many steps that required an initial investment.

“If we could spend $1,000 to save $4,000, we couldn’t do it while we were in bankruptcy. Now we can,” Dugan said. “We’re evaluating what works to keep and what we need to change.”

The plan involves the negotiating of new contracts with some vendors and ridding the hospital of contracts it doesn’t need. The hospital is also looking to bring on new investors for the property portion of the hospital, and is working on developing a program to attract new physicians with skills needed and to bring back doctors who might have left during the financial crisis.

Most of all, people need to start using the hospital again.

“People have a chance to control their own destiny,” Dugan said.

The hospital has some strong bones, such as the Women’s Center and the Wounds Care Unit.

But the hospital is also looking to provide more services geared toward the community, such as for senior citizens.

“People are living longer and will need services, and we want to be in a position to provide them,” Dugan said.

Yet, the one sign of recovery will be when the hospital reopens its maternity ward, or OB/GYN Unit.

“That will be a great moment,” she said. “That will say we are on our way back.”

email to Al Sullivan


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