A war of words over three Hudson County hospitals in crisis

While both sides petition the NJDOH, litigation may drag the events into 2021

Awaiting intervention from the New Jersey Department of Health (NJDOH), both sides in the struggle over three Hudson County hospitals have made their pleas to Commissioner Judith Persichilli. On one side is CarePoint Health; on the other, Avery Eisenreich.

CarePoint Health is dissolving and has been liquidating its assets, including Bayonne Medical Center (BMC), Hoboken University Medical Center (HUMC), and Christ Hospital in Jersey City.

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Avery Eisenreich, owner of nursing home operator Alaris Health, purchased the land of BMC and HUMC in November of 2019. CarePoint has been searching for a hospital operator for the facilities ever since, eventually signing a formal sale agreement with BMC Hospital LLC to operate the hospital in Bayonne.

CarePoint has also signed a letter of intent with RWJBarnabas Health whereby RWJBH would acquire operations at both HUMC and Christ Hospital.

Meanwhile, Hudson Regional Hospital (HRH) entered into a contract to buy the properties on which BMC and HUMC sit from Eisenreich for $76 million, and $144 million respectively. The announcement came on the same day as the announcement of the formal sale agreement between CarePoint and BMC Hospital LLC.

Hudson County Executive Tom DeGise has asked NJDOH Commissioner Judy Persichilli for help.

Mayor James Davis of Bayonne, Mayor Ravi Bhalla of Hoboken, Mayor Steven Fulop of Jersey City, Mayor Brian Stack of Union City, and Hudson County Improvement Authority (HCIA) CEO Norman Guerra also signed the letter.

In response, BMC Hospital LLC and Eisenreich have penned their own letters to the NJ DOH, asking for support of their respective transactions.

CarePoint has also filed suit against HRH claiming they are interfering with the transaction to sell the hospital in Bayonne. And while a judge denied a temporary restraining order and ruled that HRH had not breached a confidentiality agreement between the entities, a trial date is set in 2021.

Eisenreich makes his case

In early June, Attorney Angelo Genova wrote to the NJ DOH arguing in favor of Eisenreich’s deal with HRH.

Genova said that the county and the cities of Bayonne and Hoboken are “poised to repeat the same mistakes made a decade ago” in backing the proposed sale of BMC to BMC Hospital LLC.

Genova alluded to the possible debt municipalities might incur while operating the hospitals after condemnation. Recently, the Hudson County Board of Freeholders adopted a resolution authorizing the HCIA to proceed with eminent domain or condemnation.

“The county also seeks to condemn our client’s property, and to the extent successful, will saddle the taxpayers with the bill,” Genova said. “And yet, although they have not provided any evidence of site control, BMC LLC has sought this agency’s review on an expedited basis, denying the Department the ability to vet BMC LLC and preventing any transparency for the public.”

Genova also criticized DeGise for “relentlessly attacking” Eisenreich and mobilizing “the forces of government to take away his property.”

At the end of the letter, Genova alleges that the condemnation ordinance that the county and HCIA passed is unconstitutional and that he is preparing a federal civil rights complaint on Eisenreich’s behalf “seeking redress for the County’s actions.”

HRH ‘shunned’ from negotiations

Genova further claims that that the deal between Eisenreich and HRH has been shunned as a solution to the crisis.

“For reasons that are mysteriously unclear, rather than discuss the matter with stakeholders and encourage HRH as a solution, County Executive DeGise has shunned HRH as a solution and continues to aggressively protect and advance BMC LLC as the preferred future operator of Bayonne Hospital,” Genova said. “Moreover, to accomplish the BMC LLC takeover – and thus, permit a financial exit for CarePoint – County Executive DeGise and other political officials have repeatedly advocated the extraordinary step of condemning the real estate owned by my clients.”

According to Genova, the planned condemnation and transfer to BMC Hospital LLC threatens to cause “irreparable damage” to the health care services available in the county. He also slammed BMC Hospital LLC for having “no experience operating an acute-care facility,” and its track record of being sued by insurance companies.

Genova reiterated claims that BMC Hospital LLC’s request for an expedited review of the Certificate of Need (CN) is part of its effort to avoid full review of its application. The CN is granted by the NJDOH to the entity seeking to operate the hospital.

“At this point, the application of BMC Hospital LLC should be rejected for review,” Genova concluded.

As Eisenreich transfers real estate ownership to HRH, Genova said that it will become HRH’s responsibility to seek the regulatory approval of the NJ DOH to operate the hospital in Bayonne.

BMC Hospital LLC responds

In its own letter to the NJ DOH, attorney James Flynn wrote on behalf of BMC Hospital LLC to again request an application for transfer, on an expedited basis, the CN of Bayonne Medical Center from CarePoint to BMC Hospital LLC.

In seeking to rebut Eisenreich’s claims, Flynn said that BMC Hospital LLC has assembled an expert team of executives to run BMC and that HRH has a track record demonstrating that it is not suited to running the hospital. BMC Hospital LLC also brought to light lawsuits involving HRH and insurance companies.

Flynn also claims that HRH is currently struggling on multiple fronts, suggesting that it may not have sufficient funds for the transaction.

He claims that the alleged “low cash reserves and high levels of debt” indicate the hospital is not positioned to purchase additional assets. Flynn said this contrasts with the $75 million proof of funds that BMC Hospital LLC provided to the NJ DOH.

Citing utilization data from the NJ DOH, Flynn alleged HRH scored a “poor” performance as a community hospital.

“Hudson Regional Hospital should be looking inward and focus on itself becoming a robust community healthcare provider,” Flynn said. “If Hudson Regional Hospital cannot be run properly, it cannot reasonably be expected to additionally run Bayonne Medical Center and a hospital in Hoboken.”

Staff support BMC Hospital LLC

BMC Hospital LLC also got the staff at the hospital in Bayonne to voice its support for the transaction with CarePoint.

Approximately 200 people comprising “the independent medical staff, doctors, nurses, union delegates and members of the HPAE Union as well as members of the community advisory group of Bayonne Medical Center” have expressed “enthusiastic support of the pending transaction between CarePoint Health and Bayonne Hospital LLC.”

Many of those staff members would join Mayor James Davis a few day later outside of Bayonne Medical Center, calling on the NJDOH to intervene in on behalf of CarePoint and BMC Hospital LLC.

On June 24, Mayor Davis held a press conference outside the hospital with other local officials to voice his support for the transaction between CarePoint and BMC Hospital LLC.

Outside the hospital, Davis said he didn’t know of any deal with HRH and was only familiar with the deal between CarePoint and BMC Hospital LLC.

The bigger picture

Dr. Nizar Kifaieh, CEO of HRH, rejected the allegations by BMC Hospital LLC, saying that the hospital can stand on its own merit.

Kifaieh defended HRH, calling the claims “outrageous” and pointed to BMC Hospital LLC’s lack of experience running any hospitals. Kifaieh noted that HRH is Hudson County’s designated COVID-19 testing site and has been vital throughout the pandemic.

Kifaieh said that while he respects the medical staff at BMC, the management has failed the hospital. Considering that, Kifaieh argued against CarePoint handpicking its own successor with a similar management team in place.

Kifaieh said that HRH was confused by the litigation brought by CarePoint because HRH was invited into the process before condemnation proceedings and that its transaction with Eisenreich works to solve the crisis. 

Kifaieh also underscored HRH’s experience and readiness to step in at a moment’s notice.

The ball is now in the court of Commissioner Persichilli and the NJ DOH’s. However, with pending litigation and court dates set in 2021, the Hudson County hospital crisis does not appear to be ending any time soon.

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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