By now, much of the local public knows that Hoboken University Medical Center (HUMC) was recently purchased by a private company that also co-owns Bayonne Medical Center. While the sale kept the facility afloat financially and may result in improvements to equipment and programs, important questions remain, including the fact that customers with certain insurance plans may now have to pay much higher rates than several months ago.
New Chief Executive Officer Phil Schaengold, who served as the chief transition officer during the sale process, answered questions about the insurance and other matters last week. During the interview Schaengold, who has begun work in his new second floor office, had a message to residents in the community: Rediscover the hospital.
But it may be more expensive to do so right now.
In an exclusive interview last week, Schaengold was asked about the insurance conundrum. When the same ownership group took over Bayonne Medical Center, they canceled all contracts with insurers so that they could try to get a better reimbursement rate. In the meantime, people covered by those companies were not sure what their rate would be.
“Our goal is to be in network with all insurance companies.” – Phil Schaengold, CEO of HUMC
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That means that patients with most insurance carriers are in danger of paying high rates for certain services until fees are negotiated. The hospital is currently negotiating with the other insurance carriers individually.
However, all hospitals in the state are required by law to treat patients in emergency rooms, regardless of insurance coverage.
Schaengold said HUMC accepts all insurance, but some plans have different benefits for out-of-network care.
“Our goal is to be in-network with all insurance companies,” Schaengold said. “But regardless of whether we have an in-network or out-of-network agreement, all patients should not hesitate to come to our emergency room and use our services when they need them.”
At least one Hoboken resident was recently told by a doctor not to go to HUMC because patients have been surprised by large bills due to the insurance change.
Wardell Sanders, the president of the Trenton-based New Jersey Association of Health Plans, an organization that represents insurance companies, said patients will still get care at hospitals without insurance contracts, but they will likely have to pay more money “out of pocket.”
“For a consumer with health insurance, you could have no out-of-network benefits except emergency type services,” Sanders said.
Patients with insurance questions can call the hospital at (201) 418-1000.
Why was HUMC struggling?
However, part of the reason HUMC was losing money over the years was because of the low reimbursement rates from insurance companies, Schaengold said. Many formerly non-profit hospitals have closed across the country because they can’t stay financially viable.
“There was nothing really unusual here in Hoboken compared to other institutions and their financial difficulties,” Schaengold said. “Except here, there were some unusual aspects of reimbursement we identified. Managed care plans were underpaying for services, and that affected the operations here.”
As a struggling, city-owned hospital since 2008, the facility could not make capital improvements, he said.
But with the new ownership group, which will run HUMC as a for-profit facility, Schaengold said improvements are not only possible, but they’re on their way.
In the last five years, three of Hudson County’s six hospitals were sold to private owners – Hoboken, Bayonne, and Meadowlands Hospital in Secaucus. A fourth, Christ Hospital, is in negotiations with potential new owners. Only Jersey City Medical Center and Palisades Medical Center (North Bergen) will stay non-profit for the foreseeable future.
Capital improvements
Regarding improvements, Schaengold said, “One example is our goal to enhance the cardiovascular and labor delivery services.”
The hospital is in the process of installing a new catheterization lab which will help patients with chest pains.
“We also want to enhance orthopedic services,” he said. “Hoboken is a vibrant community with residents taking part in lots of activities, and we’d like to have services for people who live an active lifestyle.”
As part of the transfer of ownership, the group pledged to plug approximately $20 million into the hospital in the form of capital improvements. Schaengold said that the new improvements are one benefit of being a for-profit hospital.
“We have capital resources available to invest and improve the infrastructure, and also add more clinical services,” Schaengold said.
The hospital’s upper management is currently in the process of reviewing what they believe should be done next to improve the hospital.
Seven-year discussion
Also as part of the sale process, the state ruled that the hospital must remain as an acute care facility for at least seven years. But what will happen after seven years?
“The seven-year time frame was a state number and we didn’t create that,” Schaengold said. “We are here for the sole purpose of building an acute care facility that will serve this community for as many years as this community will support it.”
Schaengold said the goal is “to create an acute care facility for many more years to come.”
“We’ve been here for almost 150 years and we plan to be here for a whole lot longer,” he said.
This is not the first financially-distressed medical facility in which Schaengold has been involved. He brings more than 35 years of experience to the table.
“This is what I enjoy doing from a professional perspective,” said Schaengold, who has Juris Doctor and MBA degrees. “I like helping institutions that wish to turn around from difficult situations. That is what I have done my entire career.”
Schaengold has been the CEO at many hospitals that needed a turnaround across the East Coast. Schaengold was even part of the transformation of George Washington University Hospital in Washington D.C., which is the destination for the nation’s highest political officers, including the president.
As part of the transition process, Schaengold said that the hospital has reached out to six nearby mayors to form a community advisory group to help “receive input about what services are needed or desired.”
What about consolidation?
Even though the hospital will not be receiving state stabilization funds any longer because it is for-profit, Schaengold said he is not ruling out the possibility of consolidation of services, as recommended by the Navigant Report, a state-funded report on Hudson County hospitals.
The report encouraged hospitals to combine their efforts – for instance, hospitals were encouraged to drop certain services if duplicate operations are offered at a nearby facility – to reduce duplication of services. However, the report was authorized because each year the state spent millions of dollars in stabilization funds to keep Hudson County hospitals alive. Now that HUMC will be operating independent of state aid, there is less of a need to follow the Navigant Report.
“It is our desire to work with other health care institutions in the area to build the most efficient health care system possible,” Schaengold said. “Where appropriate, we’ll work with other health care institutions to do so.”
Although the sale process was extremely complicated, including additional involvement from state politicians and heated local political debates, Schaengold said, “the ups and downs of the transaction were not that unusual.”
Schaengold continued: “It was very gratifying to see that at the end all the parties came together with the one goal of ensuring HUMC will be here for a long time.”
Ray Smith may be reached at RSmith@hudsonreporter.com