Two bidders competing to buy struggling Christ Hospital were told on Friday to revise and resubmit their proposals. After a week of closed-door meetings, both bidders are still waiting to learn which of them will be permitted to acquire the hospital.
A source close to the proceedings could not confirm whether this request came from the judge presiding over the hospital’s bankruptcy or the hospital’s Board of Trustees.
The development climaxed – or anti-climaxed, if you prefer – a dramatic week for the hospital. In closed-door sessions, two that stretched until 11 o’clock at night, the Christ Board of Trustees and a committee that represents the interests of Christ’s creditors heard presentations from two bidders, Hudson Hospital Holdco LLC, and Community Healthcare Associates (CHA)/LibertyHealth System.
On Wednesday the creditors’ committee threw its support behind the joint bid submitted by CHA/LibertyHealth System. Then on Thursday the hospital’s board of trustees backed the rival bid submitted by Hudson Holdco.
“The Christ Hospital Board of Trustees voted unanimously to endorse Hudson Hospital Holdco’s bid to purchase Christ Hospital,” Christ spokesman Paul Hebert said in a statement issued Thursday evening. “After thoughtful consideration and review of both proposals, it was decided that Hudson Hospital Holdco’s bid would best ensure Christ Hospital’s mission to continue providing quality patient care as a full-service acute care hospital. Both financial and non-financial considerations were reviewed by the board in coming to this decision.”
However, Friday afternoon CHA/LibertyHealth System and Hudson Hospital Holdco were told to revise the bids the entities submitted to a U.S. Bankruptcy Court on March 15. Which bid will ultimately prevail in bankruptcy court will come down to a decision by Judge Morris Stern, who had yet to issue a ruling by late Friday afternoon.
Mark Rabson, spokesman for LibertyHealth, said, “We respect the process. We look forward to the final outcome on Friday.”
The judge’s decision will determine whether Christ Hospital remains non-profit, run by Liberty Health, or becomes part of the trend for Hudson County’s hospitals to become profit-making operations.
The winning bidder will still have to be approved by various state agencies.
Operating in the red
Christ Hospital filed for bankruptcy last month after a sale agreement to a private health care company fell through.
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.
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.”
Hudson Holdco, which already owns Hoboken University Medical Center and Bayonne Medical Center, and LibertyHealth System, owner of Jersey City Medical Center, each expressed interest in buying Christ Hospital last year.
LibertyHealth System made two offers to buy Christ last year, the second of which was a combined bid with CHA for $104.3 million.
In late December, Hudson Hospital Holdco LLC made an offer to buy Christ for $91.6 million. Christ flatly rejected Holdco’s offer days after it was made. Interestingly, the hospital’s Board of Trustees last week chose the Holdco proposal over a competing one from LibertyHealth System.
These 2011 bids, however, differ substantially from the proposals the two entities submitted to the bankruptcy court on March 15, and are also different from the revised bids presented last Friday. Details of the most recent bids are not publicly available.
The winning bidder will still have to be approved by various state agencies.
Both proposals likely highlight the perceived strengths of each institution.
Hudson Holdco officials are sure to play up the fact that it has twice purchased struggling hospitals in Hudson County and saved them from closing.
“We have a history and track record of saving hospitals, not selling them, not closing them. [LibertyHealth] can’t make that claim,” Joan Quigley vice president for external affairs at the Holdco-owned Hoboken University Medical Center, recently told the Reporter.
In 2010, LibertyHealth sold Meadowlands Hospital Medical Center in Secaucus to private owners, and in 2008 LibertyHealth closed Jersey City’s Greenville Hospital.
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.”
Hoboken and Bayonne’s hospitals are currently out of network with most insurance providers, even though Holdco says it is negotiating with the providers. Most recently, Empire Blue Cross said that it will be out of network with Hoboken University Medical Center come fall unless an agreement is reached.
Meanwhile, LibertyHealth is likely to make the case that residents would benefit from an expansion of Jersey City Medical Center.
“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 said recently. “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.
LibertyHealth officials have also argued that, as a nonprofit entity, the acquisition of another nonprofit hospital is easier under the New Jersey Community Healthcare Assets Protection Act than when a for-profit acquires a nonprofit hospital.
E-mail E. Assata Wright at email@example.com.