If all goes according to plan, Jersey City’s Christ Hospital should have a new owner by the end of the month.
At least three potential buyers of the hospital will submit final bid proposals this Thursday to a federal bankruptcy court to determine which entity will become the hospital’s new owner. A bankruptcy judge is expected to issue a ruling on March 20 on which bid is the most viable. A final ruling on the best bid will be made on March 23, after the court receives input from the Christ Hospital board of directors and the hospital’s creditors.
The winning bidder will still have to be approved by various state agencies. But if the court sticks to this schedule, Christ Hospital – which filed for bankruptcy last month after a sale agreement to a private health care company fell through – could soon be on its way to financial health.
Three bidders are likely to file proposals to buy Christ Hospital by the deadline this Thursday: Community Healthcare Associates (CHA) in a partnership with LibertyHealth System, which currently owns Jersey City Medical Center; Hudson Holdco LLC, which owns Bayonne Medical Center and Hoboken University Medical Center; and MHA, the owner of Meadowlands Hospital Medical Center in Secaucus.
MHA and Hudson Holdco are for-profit companies and would likely turn the hospital into a for-profit entity. CHA is a consulting and real estate development company that tries to stabilize struggling medical facilities by partnering with hospitals and others in the healthcare community. Like Christ Hospital, LibertyHealth System is a nonprofit entity, and Christ would remain nonprofit under Liberty’s ownership – despite the involvement of CHA – since LibertyHealth would hold the license.
Rumors that Connecticut-based Paradigm Physician Partners, also known as P3, might submit a bid to the bankruptcy court were not confirmed by press time. Geoff Teed, CEO of P3, said he hoped to issue a statement regarding the organization’s plans on March 9.
In February, an agreement to sell Christ to the California-based Prime Healthcare Services fell apart when the New Jersey Office of the Attorney General questioned the quality of care it offers at the 14 medical facilities it currently owns.
All of the known bidders thus far are based in New Jersey, which may provide some comfort to members of the community who were riled when the Christ Hospital board tried to sell the facility to the California-based Prime.
Operating in the red
Founded 139 years ago by the Episcopal Church, Christ Hospital today serves the Jersey City Heights and surrounding communities. The facility includes inpatient and outpatient procedures; behavioral health; cardiac care; emergency services; obstetrics and maternity; oncology; pediatrics and maternity; radiology; surgical; and vascular laboratory services.
But some of its services may change if it goes for-profit.
The hospital serves a large uninsured and indigent population and currently loses about $800,000 a month, according Christ CEO Peter Kelly. And according to a September 2011 letter submitted to the state attorney general from Christ’s lawyers, the “hospital’s total liabilities exceed approximately $123 million. In contrast, the hospital has recorded its assets as of June 30, 2011 at approximately $38.7 million.”
The hospital’s bankruptcy filing last month listed its liabilities as $115 million.
Last October, Kelly told the Jersey City Council, “Like other hospitals in Hudson County, and throughout New Jersey, Christ has been struggling with the needs of the community and financial pressures. Government is restricting our ability to be reimbursed. At the same time, the level of uninsured is growing. The need for health care is growing.”
Kelly said that after attempts to partner with other hospitals in Hudson County failed, Christ’s Board of Directors decided to sell the facility in an effort to keep its doors open as an acute care medical center.
Hudson Holdco and LibertyHealth System, working in partnership with CHA, both expressed interest in buying Christ Hospital last year, and they each submitted bids to the Board of Directors. But those bids were not taken seriously because of the impending deal with Prime, albeit for a lower $15.7 million purchase price.
Christ’s likely bidders are known entities that all have some track record locally.
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The bids
In late December, Hudson Holdco LLC made a bid to buy Christ for $91.6 million. This offer came with $10 million in emergency financing to help keep the hospital open to allow the Christ board an opportunity to explore purchase options from several prospective buyers.
Christ flatly rejected Holdco’s offer just days after it was made.
LibertyHealth System made two offers to buy Christ, the most recent of which was a combined bid with CHA for $104.3 million. According to the LibertyHealth/CHA offer, CHA would purchase Christ Hospital and its real estate holdings then lease the hospital back to LibertyHealth, which would run the hospital’s medical services.
Both of these rejected bids are expected to be submitted to the bankruptcy judge this Thursday, in addition to a third bid from Meadowlands Hospital Medical Center owner MHA.
Calls to an MHA spokesperson were not returned last week, so some of the details of their proposals are unclear.
But it appears that all three entities, including MHA, have already agreed to keep Christ Hospital an acute care facility for at least seven years.
A bankruptcy judge will make the final ruling on which bid is in the best interest of the hospital’s 1,000 to 5,000 creditors and the board of directors will have an opportunity to give their opinions of any bid filed by the March 15 deadline.
Christ spokesman Paul Hebert declined last week to discuss the bankruptcy process.
LibertyHealth/CHA makes their case
Representatives from MHA, Hudson Holdco, and LibertyHealth/CHA were all invited to a community forum held March 8 sponsored by Save Christ Hospital, a coalition of Jersey City neighborhood associations that wants to see the hospital remain open. Representatives from Holdco, CHA, and LibertyHealth attended the event.
LibertyHealth and CHA aggressively made their case to the community and local media outlets last week.
“Our objective is to have one license [for Jersey City Medical Center], two campuses. So, we would essentially extend Jersey City Medical Center to Christ Hospital,” LibertyHealth CEO Joseph Scott told the Reporter hours before appearing at the community forum. “We want to right-size services between the two facilities and bring the same level of quality that we have at the Medical Center to Christ Hospital.”
The vision for the expanded medical center, as Scott explained it, would be to bolster the services each facility already does well. For example, he noted that Christ Hospital has a radiation oncology department that Jersey City Medical Center does not currently have at its Grand Street location. Jersey City Medical Center has a comprehensive heart center that Christ currently lacks.
Acute care services, he said, would remain in place at both hospitals. Some departments, such as billing and human resources, might be consolidated at one location and CHA may choose to lease out some Christ-owned properties.
Scott said no decision has been made regarding what LibertyHealth and CHA would do with the Christ Hospital School of Nursing, located across the street from the main facility on Palisade Avenue, but a nursing degree program would remain.
When asked what distinguishes their bid from those from Holdco and MHA, CHA officials noted that the state approval process will be much faster if the non-profit Christ Hospital is sold to another non-profit owner. Under the New Jersey Community Healthcare Assets Protection Act, state agencies give more scrutiny to hospital sales when a nonprofit hospital is sold to a for-profit company. The sale process can take as long as a year. Given Christ’s financial straits and the months spent pursuing the deal with Prime Healthcare, which ultimately went bust, time was squandered that the hospital now can’t afford to waste, CHA officials argued.
LibertyHealth also believes its nonprofit status makes it a more suitable buyer for Christ Hospital.
“We believe we will be here no matter what,” Scott said. “I don’t know that you can get that same kind of commitment from a for-profit healthcare company if they’re not making money…Their strategy is to grow their bottom line by functioning as an out of network hospital.”
But Joan Quigley, vice president for external affairs at the Holdco-owned Hoboken University Medical Center, countered, “We have a history and track record of saving hospitals, not selling them, not closing them. [LibertyHealth] can’t make that claim.”
LibertyHealth sold Meadowlands Hospital in Secaucus to private owners two years ago.
Holdco’s track record, Quigley said, makes the Holdco bid the better option for Christ, which could be in jeopardy of closing.
Quigley also argued that insurance companies are largely to blame for the financial straits most non-profit hospitals are in.
“Some of these companies have no incentive to pay fair rates for services,” she said. “Because we now own two facilities in Hudson County, we’ve been able to negotiate better rates with them. We would be able to negotiate from an even stronger position if we also gained Christ Hospital.”
However, Hoboken and Bayonne’s hospitals are currently still out of network with most insurance providers, even though Holdco says it is negotiating. Most recently, Empire Blue Cross said that it will be out of network with Hoboken come fall unless negotiations are resolved.
The for-profit companies that bought area hospitals have canceled several contracts with insurance companies in order to renegotiate reimbursement rates – but this has meant that patients covered by these companies have had to go elsewhere or face high out-of-network payments. (They can often still get coverage if they have to use the emergency rooms in a bona fide emergency.)
Despite the fact that Jersey City Medical Center recently cut ties with Aetna, Scott said it is his hospital’s intent to be in-network with every health care provider. He said he expects Jersey City Medical Center to sign a new contract with Aetna “soon.”
Comment at www.hudsonreporter.com. E-mail E. Assata Wright at awright@hudsonreporter.com.