HOBOKEN — As the city of Hoboken works out a bankruptcy agreement for Hoboken University Medical Center so that they may sell it to a private company called HUMC Holdco, Mayor Dawn Zimmer’s detractors have said that other bidders have given proposals to buy the hospital, and that perhaps they should have been considered.
Yesterday, Mayor Dawn Zimmer released a response, saying that two of the proposals – from Jersey City Medical Center, and from a company called P3 – were not as good as the current bid from HUMC Holdco, for a variety of reasons.
Those proposals are posted on the city website.
When contacted by the Reporter, Jersey City Medical Center declined to comment. But P3 offered a comment late on Thursday afternoon.
They said that the proposal that Zimmer posted was outdated, and that unlike Holdco, they would run the facility as a nonprofit and keep it for health care “in perpetuity.” Holdco has given a guarantee for seven years.
P3 wrote, “For the record, I believe in Mayor Zimmer’s attempt to ‘Correct the Record Regarding Hospital Sale’ she misrepresents the following.”
The letter went on to say:
1) The proposal Mayor Zimmer shared with respect to P3 is our initial response to the public RFP announced by the Hoboken Municipal Hospital Authority (HUMC) in July of 2010. At that time, P3’s offer of a management agreement with financing was intended as a sensible alternative to liquidating the hospital (which was on the table as an option), nothing more. In the attached Supplemental proposal submitted on Dec 10, 2010 we included an asset purchase agreement (see HUMC_P3_SUPPLEMENTAL RFP Response.) The details of the three options offered begin on page four.
2) P3’s investors remain prepared to finance this transaction assuming the seller is cooperative, willing to put aside politics and hostility, and conduct negotiations in good faith.
P3’s proposal is very rich in that we are now proposing (over six months later) to assume the $35M in creditor’s claims–neither the existence of which nor the magnitude of which was known at the time we made our supplemental proposal. P3’s total deal consideration is over $120M ($51.6M + $11M (bonds & interest) + $25M (working capital & improvements) + $35M (creditor’s claims.) A transaction of this magnitude reasonably requires the supporting documentation for our investors to have the confidence that this transaction is feasible and secure.
To date, we have been limited to exactly one guided tour of HUMC and despite many repeated requests by our team, we were never granted access to the level of financial and operating details necessary to develop a pro forma with enough depth to secure a firm capital commitment and letter of credit from our investors. Our investors are still waiting for the opportunity to make that commitment, but need to know that the HMHA is interested in selling it to them.
3) P3 has not owned a hospital since, as a corporate entity, we are relatively young; howeverer, P3’s executive team consists of highly qualified CEOs who have transformed hospitals from far worse financial condition and in far worse demographic regions and P3 executives have completed several hundred million dollar hospital and health system transactions.
4) Moreover, although our investors will own all the relevant properties constituting HUMC (not unlike the current proposal by Holdco). P3 will be operating the hospital as a nonprofit with the option to repurchase the hospital to ensure that it will remain a community health care asset in perpetuity.
The letter is signed by Geoff Teed of Paradigm Physician Partners.
Messages were left for Mayor Dawn Zimmer — who is off work today for the Jewish holiday — and when her response is received, it will be posted.
For many more details on this controversy and what led up to it, see the links to prior articles below.
What do you think? Does P3’s argument have merit, or should Hoboken stick with the current deal? Comment below!