Further chaos erupts in Hudson County hospital crisis

As CarePoint secures an operator for Bayonne Medical Center, the facility has a new landlord

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Further chaos erupts in Hudson County hospital crisis
Bayonne Medical Center sits at the center of the crisis.

In recent days more scenes have unfolded in the drama involving three Hudson County hospitals.

On June 2, BMC Hospital LLC formally agreed to acquire operations for Bayonne Medical Center (BMC) from CarePoint Health, the current owner of BMC.

“Yesterday’s agreement advances BMC Hospital LLC’s plans to continue Bayonne Medical Center’s central role as the city’s acute care hospital while expanding its services with more physicians and specialties,” a spokesperson for BMC Hospital LLC said. “The transaction is expected to close in the summer of 2020, subject to the receipt of standard regulatory approvals and customary closing conditions.”

According to BMC Hospital LLC, the agreement was submitted for review by the New Jersey Department of Health (DOH). The parties have asked the DOH to approve the transaction on an expedited basis to “ensure a smooth transition and to enable the hospital to prepare for an expected bad flu season later this summer, as well as a second pandemic wave if it occurs in the fall.”

BMC Hospital LLC and CarePoint Health had signed a letter of intent to acquire operations at BMC in late March. It has now signed the formal sale agreement.

Hudson Regional Hospital announced real estate purchase

Hours later, Hudson Regional Hospital (HRH) announced it had purchased the land BMC is on. While CarePoint owns the operations, BMC’s land is owned by Avery Eisenreich, CEO of Alaris Health. Eisenreich also owns the real estate of Hoboken University Medical Center (HUMC) and 25 percent of Christ Hospital real estate.

HRH has entered into a contract to buy the properties on which BMC and HUMC sit from Eisenreich for $76 million and $144 million respectively.

The deal comes on the heels of HRH announcing last week that it had offered to purchase the hospital operations of BMC, HUMC, and Christ Hospital in Jersey City from CarePoint.

HRH provided CarePoint a “Proof of Funds” letter, but CarePoint has not responded to the offer.

“Last night we agreed to an unconditional deposit payment and purchase price for the hospital properties and we expect to close within 90 days,” said Dr. Nizar Kifaieh, president and CEO of HRH.  “We have removed the most significant obstacle to fulfilling our vision of creating a premier hospital network in Hudson County without burdening the taxpayers or any public funding during these very trying times.”

In early May, the Hudson County Improvement Authority (HCIA) announced that it would begin eminent domain proceedings to protect the viability of the hospitals. This is what prompted HRH to reach out to Eisenreich in hopes of remedying the crisis through an alternative solution.

“We expect to marry land ownership with hospital operations to resolve any concern about the stability of the healthcare network,” said Kifaieh. “These were difficult, complex negotiations that took place over several months, and we are very gratified by our Chairman Yan Moshe’s commitment to complete the transaction.”

Eisernreich’s attorney, Angelo Genova, released a statement on behalf of his client, praising the transaction.

“The property owner’s concern always has been to insure that Hudson County residents have access to quality acute healthcare,” Genova said. “Today’s announcement by HRH meets that goal. Our county is fortunate to have such a fine local medical provider and medical team step up and fill this critical void.”

However, CarePoint was quick to refute some points in HRH’s announcement.

CarePoint disputes claims

CarePoint Health and BMC Hospital LLC, the current and prospective owners of BMC, dispute and are “confused by the competing ownership claims announced earlier today by Hudson Regional Hospital.”

CarePoint has claims pending against Eisenreich, Alaris Health, and other entities controlled by Eisenreich that CarePoint claim challenge Eisenreich’s right to purchase the real estate at issue.

“We simply do not see how Hudson Regional can agree to purchase the real estate with these significant claims that will be tried this summer,” a spokesperson for CarePoint said.

CarePoint Health and BMC Hospital challenge HRH’s interpretation of the existing lease and the rights of the landlord to an assignment or sublet of the lease.

“We are also confused by Hudson Regional’s statement that, by virtue of its contract to purchase the Hoboken and Bayonne real estate, it is certain that Hudson Regional will take over the operations of the hospitals,” according to CarePoint. “Hudson Regional’s status as a landlord does not give it the right to take over the hospitals.

According to CarePoint, “Based on CarePoint’s confidentiality agreement with Hudson Regional and the fact that CarePoint’s contract with BMC Hospital is exclusive, CarePoint cannot comment on whether Hudson Regional made an offer concerning one or more CarePoint hospitals.”

Another back and forth

“The contract to purchase the hospitals is in force with a hard deposit, and the closing will occur within 90 days,” a spokesperson for HRH said. “Control of the hospitals is with Hudson Regional.”

Any unresolved litigation or prospective litigation will be revealed in the due diligence period, but as of now HRH said there is no judgment that would prevent it from closing.

“The expectation that we should make the terms of our transaction public is ironic, in that we have shared more information with the public within 48 hours of completing our transaction than BMC and CarePoint have, when they entered their agreement 60 days ago and it requires public funding and both buyer and seller have verified it,” according to HRH. “Even HCIA had not seen the deal when it agreed to begin eminent domain proceedings at its more recent meeting.”

According to HRH, the lease cannot be assigned without express permission from the landlord, and in this case, the DOH. Claims to the contrary are disingenuous, HRH said.

“Hudson Regional recognizes that CarePoint is the current tenant operating the hospitals and that in order to assume the operations, we would need to purchase that right from CarePoint,” HRH said. “This is why we have made an offer to CarePoint and supplied proof of funds.”

There is “zero chance,” HRH said, that it will accept BMC Hospital LLC as a tenant to operate BMC.

Temporary restraining order filed

CarePoint’s response to the further complication of the hospital deal is to file a Temporary Restraining Order (TRO).

CarePoint and BMC Hospital LLC have filed a TRO alleging HRH’s conduct is interfering with CarePoint’s contract with BMC.

According to CarePoint, the temporary restraining order demands that such interference end, because it interferes with contractual rights and public welfare. The temporary restraining order is intended to obtain a court order prohibiting HRH from further breaches of the confidentiality agreement and to destroy and delete all confidential information.

“It’s asking for expedited discovery to learn whether they disclosed confidential information to third parties, including Avery Eisenreich,” according to a spokesperson for CarePoint.

CarePoint said it’s looking forward to eminent domain to rid the hospitals of “profiteers and nursing home bandits, and promote the welfare and prosperity of the whole Hudson County community.”

Confidentiality agreement

CarePoint said that HRH became interested in a transaction in January and that before the parties discussed anything, both parties must sign a confidentiality agreement.

The agreement permits the sharing of confidential information. CarePoint claims HRH downloaded thousands of documents. The agreement prohibits either party from disclosing materials shared, absent written consent by the other.

The confidentiality agreement prohibits either party from disclosing that they are negotiating a deal or the terms of any deal.

According to CarePoint, HRH submitted a bid for BMC in March and lost.

“BMC Hospital offered a better proposal with agreement to keep the hospital as an acute care hospital, continue and increase services and hire all employees,” according to CarePoint. “We have the support of the doctors, nurses, elected officials, businesses, and community for the BMC Hospital deal.”

After losing the bid, HRH is now trying to intervene in the BMC deal, CarePoint claims.

“Our intentions have been made very clear since we officially submitted a proposal to the owners of CPH to acquire all three facilities which include CH [Christ Hospital] over two weeks ago,” a spokesperson for HRH said. “We are baffled by those allegations and think they’re a desperate attempt to deviate the public’s attention to the fact that we are a solid solution to the saga that has been taking place in Hudson County related to the sale of CPH. We present a solution that saves the taxpayers’ money and time. It’s that simple.”

As of now, HRH owns the real estate of BMC. BMC Hospital LLC is set to be the operator of BMC. CarePoint Health has also signed a Letter of Intent with RWJBarnabas to transfer operations of Christ Hospital and HUMC.

For updates on this and other stories, check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at disrael@hudsonreporter.com.

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