Hoboken is home to the only city-backed hospital in the state, and the past financial trouble at Hoboken University Medical Center has made some taxpayers very nervous. City representatives have recently begun taking more control over the institution. The new commissioners appointed to the nine-member Hoboken Municipal Hospital Board are increasing oversight of Hudson Healthcare, the non-profit hospital’s management firm.
On Wednesday, the new board majority elected a new chairperson – local taxpayer activist and financial attorney Toni Tomarazzo – and started a controversial process to hire special legal representation to investigate “potential opportunities” for the institution. Informed sources say this may be the first step toward returning the hospital to private ownership, which would take any potential financial failure of the hospital off the taxpayers’ shoulders.
“Time is of the essence.” – Dawn Zimmer
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Hospitals across the country have closed due to financial problems caused by inadequate insurance reimbursement, inadequate state reimbursement, and competition from private facilities.
Bring in the lawyers
On Wednesday, the board passed a resolution 5-4 to begin interviewing special attorneys in public session, but they have yet to commit any funds for the hire. The attorneys will be asked to explore “opportunities” for the hospital.
Commissioner Tejal Desai said in an interview that the firms selected for interviews will be asked what savings they can bring to the hospital, which would likely offset the cost of their efforts.
Responding to a hospital employee’s question at the meeting, Mayor Dawn Zimmer said she supports privatization of the hospital.
“Time is of the essence,” Zimmer said. “We have to act before our alternatives are narrowed further.”
Zimmer vaguely said that she has received a number of inquiries about the hospital, but did not respond to requests for clarification about whether the calls were from potential buyers or some other interested parties.
In their own way, HUMC CEO Spiros Hatiras and other hospital officials support Zimmer’s position that the city should not be in the hospital business. Hatiras said the municipal backing of the hospital was always meant to be a short-term solution, but he urged caution in proceeding toward potential privatization.
One person close to the hospital proceedings later accused Zimmer of trying to “fast track” a potential sale of the hospital without full regard for the employees, who recently took a pay cut to help keep the hospital open.
The politics of change
Five new commissioners have been appointed to the board since Zimmer took office this past summer, including her own representative, Dr. Jonathan Metsch, the former CEO of Jersey City Medical Center who left that institution after a scathing audit revealed losses of nearly $3 million per month.
The tactics used by the new board members – including introducing the special counsel resolution without telling anyone before Wednesday – were questioned last week by the longer-serving board members and by the current hospital management team, which has been more forthcoming with information than the previous managers.
Two medical professionals on the board, Commissioners Dr. Alfred Fayemi and Dr. Joseph Kozel, accused the new board majority of keeping the resolution for the special counsel from the board minority until the meeting.
Fayemi also warned that talking about the sale of the hospital means the facility risks losing employees who may fear for their jobs.
“News of a sale is going to kill this institution,” he said. “There are [hundreds] of lives and families at stake here. Everybody is very sensitive. We are in trouble with the staff because the staff is demoralized.”
The employees recently took a voluntary 10 percent pay cut to help the hospital’s finances.
On Wednesday, board Commissioner Kevin Kramer was critical of hiring new counsel, calling it “overkill and premature,” since the state is preparing a report – due before the summer – that will address the regional issues with hospitals in Hudson County.
The report pays specific attention to HUMC and Jersey City’s two hospitals, Christ Hospital and Jersey City Medical Center, all three of which received $7 million state funding for hospitals facing closure or loss of major services.
But new Commissioner Steven Rofsky said the hospital needs to prepare itself for that state report, which some people have speculated may recommend the closure or conversion of either Christ or HUMC.
Tomarazzo said the special counsel will serve a different role with different objectives than the state analyst. “Their job is to specifically serve one client, this hospital,” she said of the new counsel.
The special counsel is expected to be hired for an 11-month contract by April 16.
Coming off life support
Following near closure in 2006, a taxpayer bailout of $52 million in bonds in 2007, claims of a miraculous turnaround in 2008, and the uncovering of alleged mismanagement and subpar oversight in 2009, HUMC is struggling to stay alive.
The hospital reported a loss of one-third of its total assets in 2008, after an audit revealed misrepresentations of expected income.
Last year, Hatiras took over as president and CEO of the hospital management company and avoided financial collapse by convincing union and non-union employees to accept salary cuts, among other initiatives. The state also pumped $7 million into the square-mile city’s only hospital.
One of the specific areas of review for the new counsel will be bills owed by the hospital to its vendors. The hospital takes more than twice as long as the average hospital in New Jersey to pay its vendors, a problem that according to Tomarazzo dates back to the previous head of Hudson Healthcare, Harvey Holzberg.
State cuts may not affect hospitals as much as they affect the schools, and HUMC’s budget (before factoring in depreciation of assets) has been presented by the management as break-even for 2010, which was a goal of Haritas. Some board members and Zimmer, who spoke at the meeting, challenged Hatiras’ representation of a break-even budget and said that the first two months of the year are indicating losses.
Hatiras called Zimmer “dead wrong” about her assumptions and told the board two months is not enough time to see trends.
“How did I blow my budget in 58 days?” he asked rhetorically. “We’re going to do better than break-even.”
The board has yet to approve the budget, and Tomarazzo said she intends to send it back to Hatiras for revamping before a vote.
Critical of more oversight?
Kramer, who stepped down last week as chairman of the board to spend more time with his family (but remained on the board), was an original member of the board from 2006 and was reappointed to the board in 2007 for a term that expires in 2012.
Announcing the ceding of his chair position, Kramer waxed poetic about the people in the hospital he has come in contact with as a member of the board.
Kramer spends much of his time at the dais promoting the many good works of the hospital, but he has never addressed accusations that the hospital board in years past provided no oversight for the management firm.
Although board members never complained publically, the board was not receiving mandated detailed financial reports from the hospital management firm, Hudson Healthcare, for years, according to board attorney Andrew Aronson. Since his hiring, Hatiras has begun providing these reports to the board.
In a follow-up interview, Kramer, a young attorney who specializes in healthcare issues, was asked whether lax oversight had put people’s jobs at risk – the people he champions. He would not comment about his service on the board or the oversight that the board has provided; he referred all such questions to the hospital administration.
Another original member and former city councilman, E. Norman Wilson, said, “It’s possible that some of the oversight that should have been done wasn’t done as closely or as carefully as it should have been.”
If a sale of the hospital is in the works, Wilson said he wants to know the plan of the buyers before executing any arrangement.
“We [have to] see what a private buyer would do with the hospital,” he said, “and what it would do to the population [of Hoboken]. But, you have to keep your mind open.”
Timothy J. Carroll may be reached at tcarroll@hudsonreporter.com.