Hoboken University Medical Center (HUMC) was on life support last week as the city sought ways to pay for a proposed settlement agreement between the bankrupt hospital’s operator and its creditors. Talks between various groups involved in the settlement continued past press time on Friday, and Mayor Dawn Zimmer said she expected an announcement soon.
The hospital’s recent bankruptcy must be settled in order to complete the sale of the city-owned hospital to private owners who are also co-owners of Bayonne Medical Center.
On Friday, the negotiations between the hospital, creditors, and unions continued after Gov. Christopher Christie, an ally of Mayor Dawn Zimmer, said he would make available $5 million of state money for the bankruptcy settlement. The announcement came the day after Zimmer’s City Council foes refused to vote to authorize a $5.5 million bond issue to close the gap between the hospital and its creditors.
“[Christie] wants to support a backroom deal to sell the hospital to one of his biggest campaign contributors for pennies on the dollar.” – Councilwoman Beth Mason
Zimmer said on Friday in front of a crowd of hospital workers that the creditors were very close to an agreement, adding that there was a breakthrough in the negotiations.
The hospital is in the process of being sold to HUMC Holdco, a group that owns Bayonne Medical Center, which has donated at least $25,000 to Reform Jersey Now, a political action committee that supports Christie. A public relations representative for Holdco also donated the maximum $25,000 limit to Reform Jersey Now, reports show.
Zimmer has said that if the sale does not go through, the hospital will close, and Hoboken taxpayers will be responsible for $52 million in bonds that the city guaranteed in 2007 to save the hospital from closure.
While there are other companies who have persisted in saying they want to buy the hospital, Zimmer says there is not enough time to go through another round of negotiations.
The owners of Jersey City Medical Center, LibertyHealth, made their proposal to buy the hospital available to city officials on Thursday after Assemblyman Ruben Ramos (D-Hoboken), a Zimmer foe, called for the other bidders to go public. Documents show that Liberty Health provided a letter to Zimmer and the Hospital Authority in March that showed they secured a financial partner for purchasing the hospital.
Other bidders, including Geoff Teed of P3, a non-profit hospital operator in Connecticut, have also made their interest in the building public.
The decision by the authority to negotiate with only one bidder after receiving six qualified proposals has drawn scrutiny, particularly from Zimmer’s critics.
Christie vs. the unions
Zimmer and Christie blame the unions for not coming to an agreement, and said that the hospital was offering almost 30 cents on the dollar to the creditors who are owed money from the bankrupt hospital.
Two of the hospitals’ workers’ unions are creditors in the bankruptcy, and each one has a representative on the creditors’ committee. The committee, which has seven members, must come to an agreement before a settlement is approved.
Zimmer said late Thursday night that 825 of the hospital’s approximately 1,300 members put in their applications to work for Holdco.
“While the unions are not supporting the deal, the employees are saying, ‘Yes, we want a job,’ ” Zimmer said when reached by phone.
A call to Virginia Treacy of JNESO, the nurse’s union, was not returned on Friday.
Christie, after pledging $5 million, also used the opportunity to criticize the unions, saying they needed “to provide necessary concessions.”
Christie also attacked Zimmer’s council foes in his statement.
“It is completely unacceptable that the City Council placed local politics ahead of the 1,300 employees at the Hoboken University Medical Center and the people in the community who rely on the critical services provided by this hospital,” Christie said on Thursday.
Not every council member was pleased with Christie’s pledge of $5 million, including Councilwoman Beth Mason.
“Last night, four members of the Hoboken City Council [her allies] took steps to protect the long term viability of Hoboken University Medical Center by asking the Hospital Authority to impose a deed restriction in the sale contract,” Mason said in a statement on Thursday afternoon. “Furthermore, we asked for transparency in this extremely troubling and secretive process by calling on the mayor and Hospital Authority board members to release their depositions [after subpoenas by the creditors brought officials to court]. Now the governor wants to support a backroom deal to sell the hospital to one of his biggest campaign contributors for pennies on the dollar.”
Zimmer said before the council meeting on Wednesday that the deal was “on life support” but she was counting on the bond ordinance to save the deal.
“The sale cannot proceed unless a settlement is reached with the [Hudson Healthcare Inc.] creditors,” Zimmer said. “Plain and simply, it is in the best interest of our city and the taxpayers [to pass the bond].”
The mayor’s four political foes on the council voted against the legislation, saying that they wanted more guarantees in writing about the buyer’s commitments and more information. Zimmer needed six yes votes, or a supermajority, to pass a bond ordinance.
Councilman Michael Russo voted against the deal, putting the blame for the dying deal on the mayor.
“She chose not only as the mayor but as a member of the [Hoboken Municipal Hospital Authority] to veil this in secrecy from the very beginning,” Russo said. “She chose not to include any of us...she made that bed, she needs to sleep in it.”
The council has been told by a city attorney that they didn’t need to be informed about the deal, and the autonomous Hoboken Municipal Hospital Authority, a city board on which the mayor sits, would handle the sale.
Council allies of the mayor, including Councilman Peter Cunningham, said they weren’t happy with the bond ordinance, but they would vote in favor of it because it was better than the alternative of the city paying off the $52 million bond.
Attorneys at the council meeting said putting a deed restriction on the property could hurt the financing of the sale.
The potential owners have pledged to keep the hospital as an acute care facility for seven years, but Mason and her allies want to be sure. The state Health Planning Board has also recommended a seven-year period to Commissioner of Health Mary O’Dowd, who must ultimately issue a certificate of need so they sale can go through. But there is no state law requiring it to stay a hospital for seven years after being sold.
State potentially chipping in $16M to deal
The state has already earmarked $11 million in legislation to help the city extinguish the bond guarantee, easing the sale.
The earmark became controversial after it was discovered two relatives of a potential new owner donated $2,600 each to Ramos, the original sponsor of the legislation. Ramos gave the money to charity after the issue came to light. Ramos has said his legislation is only meant to help extinguish the bonds. He also said he has been against the sale process to Holdco.
He issued another statement on Thursday against Zimmer.
“From the beginning, the mayor and the authority’s efforts to transfer the hospital to Holdco have lacked transparency, with even the City Council being denied access to relevant details and documents despite repeated requests for this information,” he said.
Ramos also supported the council members who voted against the $5.5 million bond, saying the council minority against Zimmer “made clear that it is unwilling to be a party to backroom dealings conducted without the benefit of meaningful public input.”
Settlement negotiations between creditors and the hospital were still underway as of press time. For up to date information about the sale, visit HudsonReporter.com.
Ray Smith may be reached at RSmith@hudsonreporter.com