Officials from the city’s only hospital, and from the board that oversees it, were asked to attend a workshop meeting of the City Council last Monday to provide information concerning their recent attempt to restructure the facility’s $52 million bond.
There have been concerns from the public because the City Council originally approved the $52 million bond in 2006 in order to save the hospital from closing. If the newly renamed Hoboken University Medical Center fails financially, the taxpayers could bear the burden of being responsible for the bond.
Last month, the hospital applied to the state to restructure $12 million of the $52 million so they can use it for current expenses rather than only for construction projects.
When they did this, some members of the council thought it might mean that the hospital does not have enough money to keep running.
Monday’s council meeting was just informational; the council does not need to approve the restructuring because the hospital is not seeking any more funding. Instead, the hospital wants to re-purpose a portion of the bond and refinance a portion.
The details
Harvey Holzberg is the CEO of Hoboken University Medical Center and of its management company, Hudson Healthcare. At Monday’s meeting, Holzberg said that the restructuring will put some projects on hold until the new Emergency Room, scheduled for completion next year, can be opened. Holzberg expects the new ER to increase revenues by 10 percent.
The city collects $1.2 million per year from the hospital as part of their leasing agreement.
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DSH funding from the state supports hospitals with a high volume of low-income patients.
According to Holzberg, 50 percent of HUMC’s patient bills are paid by Medicare and Medicaid.
“State reimbursements for services provided have not met projections, and further reductions are possible – creating a cash flow problem and the need to change status of a portion of bonds to provide short-term relief,” Holzberg said in his presentation to the council Monday.
The restructuring of the bond includes taking $5.7 million in tax-exempt funds that were earmarked for capital improvements, and moving them to taxable status to fund current operations.
Certain capital improvement projects are now being postponed, including conversions to private rooms and the creation of a cardiac catheterization lab.
Other projects, prioritized due to their ability to generate more revenue, will continue, including the ER and maternity unit.
The other part of the bond restructuring is to extend the life by three years and defer principal payments totaling approximately $5 million. The newly gained money that would be made available for use by the hospital now.
Need cash, stat
Early in May, the hospital put forth their application to the state’s Local Finance Board for approval of the bond restructuring, but the application was not complete and the hearing was postponed.
Some councilpersons were irked that in the hospital’s application to the state, the hospital said that the City Council was made aware of the request to restructure. In fact, they were not made aware.
Beth Mason, 2nd Ward councilwoman, sent a letter to the Local Finance Board asking that they delay hearing the hospital’s case until the council had time to better understand the situation.
Mason had a litany of questions for officials at the meeting. She specifically wondered why budget audit done by the Municipal Hospital Authority – which oversees the hospital – includes a statement saying that 99 percent of costs, those of HUMC’s management (Hudson Healthcare), were not included in this audit. The audit statement led Mason to believe that only 1 percent of the hospital finances were included in the HMA audit.
HUMC CFO Ron DiVito said it was “a complicated process” and explained that expenses of $111 million per month for HUMC are “passed through” the MHA. He said that all revenues, about $137 million per month, are passed back to the MHA.
“The operation is collapsed into the financials for the authority [MHA] of the hospital [HUMC],” DiVito said.
According to DiVito, a separate audit was done of HUMC financial statements and would be provided to the council soon.
The statements left Mason with more questions.
Also at the meeting, Councilman-at-Large Ruben Ramos said he had been trying as a state assemblyman to restore aid to struggling hospitals. Numerous hospitals in the state are having financial problems, ranging from insurance reimbursement difficulties to competing with specialized medical facilities.
“I’m on multiple resolutions agreeing to restore Charity Care,” Ramos said, referring to a state program that reimburses hospitals for taking care of the poor. “In [the Democratic] caucus this is a big issue.”
Ramos added, “I don’t want to micromanage our hospital.”
Councilwoman-at-Large Terry LaBruno pointed out that the city has yet to put out any money for the hospital, yet the city collects $1.2 million per year from the hospital as part of their leasing agreement.
Councilman-at-Large Peter Cammarano had no questions, but addressed what he referred to as “paranoia” of some council members concerning the hospital.
“I don’t drive down the street … and approach a bridge, and think ‘Maybe I shouldn’t cross this bridge because it could collapse,’ ” he said.
Cammarano said in an interview on Monday that the reason he had no questions at an informational meeting was that he has been asking questions about the status of the hospital to hospital board members for some time.
Cammarano said at the meeting, “We’re all entitled to our own opinion, but not entitled to our own facts.”
Dawn Zimmer, 4th Ward councilwoman, said that the recent tenseness between the council and the hospital can be blamed on “communication problems,” and that both the hospital and the council need to work on the issue.
Committee formed
At the council meeting on Wednesday night, Council President Theresa Castellano, 3rd Ward Councilman Michael Russo, and Councilwoman-at-Large Terry LaBruno volunteered to sit on the council’s hospital committee.
The council created this ad hoc committee to act as a liaison between the city and the MHA, which itself is a liaison between the city and the hospital.
Hospital officials said at the meeting on Monday that council committee members would be able to ask questions at public hospital meetings.
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