CarePoint Health transitioning to nonprofit

Is this the end of the battle over the operations of Bayonne Medical Center?

Is the years-long fight over Bayonne Medical Center's operations finally over?
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Is the years-long fight over Bayonne Medical Center's operations finally over?

In another turn of events, CarePoint Health has announced it will transition from a for-profit system to a nonprofit.

The nonprofit entity, which is still in the making, will be led by CarePoint CEO Dr. Achintya Moulick in collaboration with local leaders to “ensure community control of the hospitals moving forward.”

“The formation of a new nonprofit will allow the three-hospital system to continue its trajectory of bringing in multiple tertiary level clinical services with nationally known clinical organizations while giving these precious assets back to the community,” Moulick said. “The pandemic has shown community hospitals to be the cornerstones of healthcare delivery in Northern New Jersey, and the transition to a nonprofit is the best way to ensure we remain so for future generations.”

Moulick is overseeing the formation of the new nonprofit. He is currently engaging in discussions with key Hudson County community members. An official announcement of the new board formation and nonprofit mission statement will follow.

The nonprofit was conceived in collaboration with the founders, Vivek Garipalli and James Lawler. Garipalli, who is also CEO of Clover Health, and Lawler will step down from their roles of oversight following the formation of the new nonprofit board. They, along with their affiliates, will pledge their majority interest in CarePoint Health hospitals and Christ Hospital land.

A new chapter?

“After working closely with Dr. Moulick, we decided together that CarePoint is ready to begin its next chapter under the guidance of a new nonprofit board,” said Garipalli. “Following 13 years of hard work transforming the hospitals, our biggest priority is preserving CarePoint’s future so that the hospitals remain a vital resource for families in Hudson County for many years to come.”

The facilities in the system are considered safety net hospitals, or hospitals with the highest number of inpatient stays that were paid by Medicaid or were uninsured. At Christ Hospital and Hoboken University Medical Center, these patients make up approximately 60 percent of the current patient mix, according to CarePoint.

“Safety net hospitals have a precarious existence, placing incredible stress on organizations that are dedicated to serving our most vulnerable citizens,” said Lawler. “Having spent well over 40 years working to sustain safety net hospitals in New York and New Jersey, I’ve seen firsthand how critical this care is for our underserved populations and how challenging it is for colleagues to maintain, often against all odds. It has always been our intention to move from stabilizing the hospitals, to securing their future, and today is the culmination of that work.”

CarePoint’s three hospitals will continue to operate in their current form and will be controlled by the new nonprofit organization, a spokesperson told the Bayonne Community News when asked if the hospitals were still up for sale.

“The nonprofit’s top priority is to work collaboratively with the Hudson County community to maintain critical health care for those who need it most,” according to the spokesperson. “Any decision made by the nonprofit board will be to sustain these three hospitals moving forward.”

Tumultuous history

The CarePoint Health system, which now employs over 3,000, began in 2013. Garipalli had purchased the hospitals out of bankruptcy or near-bankruptcy in the preceding years, starting with Bayonne Medical Center in 2008. CarePoint turned the hospitals around and ran them successfully for a number of years.

In March of 2019, a state investigation uncovered that Garipalli, Lawler and another cofounder were paid over $157 million by the hospitals through shell management companies. The report did not allege that anything illegal or improper had occurred, but the hundreds of millions in consulting payouts “raised questions about the nature of their operations,” and the NJ State Commission on Investigation (SCI) urged legislators to expand systems that monitor financial decisions made by the owners of hospitals.

In October of that year, it was announced that CarePoint had signed a letter of intent to sell the hospitals to RWJBarnabas Health, with the exception of Bayonne Medical Center. As Bayonne Medical Center’s fate remained unknown, and rumors swirled about the hospital shutting down, city and state officials established a hospital authority and introduced hospital oversight legislation.

In November of 2019, Avery Eisenreich, owner of nursing home chain Alaris Health, purchased the property of Bayonne Medical Center. However, he did not intend to operate the facility, prompting CarePoint to search for a replacement.

CarePoint signed an agreement in March of 2020 with BMC Hospital LLC to operate Bayonne Medical Center. At the same time, the Hudson County Board of Commissioners, then Freeholders, voted to begin eminent domain proceedings for the Bayonne Medical Center property.

Following the initiation of eminent domain proceedings, Hudson Regional Hospital in Secaucus purchased the property of Bayonne Medical Center from Eisenreich for $76 million. Since the sale has closed, Hudson Regional has made clear its intention to operate the hospital, not BMC Hospital LLC.

This sparked a war between the two entities over who will operate Bayonne Medical Center. Meanwhile, the agreement between CarePoint and RWJBarnabas fell through, and CarePoint inked a new deal with KPC Global Management LLC to operate Christ Hospital and Hoboken University Medical Center.

It seems that none of those entities will operate any of the hospitals for now, barring a decision from the new nonprofit’s board.

End of eminent domain?

This may temporarily end the war over the operations of Bayonne Medical Center, which had recently been brought before the Bayonne City Council in the form of two ordinances which would condemn the hospital through eminent domain. A vote on the ordinances, which are doomed to fail, has been postponed by the council since a public hearing was held in May, pending approval from the New Jersey Local Finance Board.

The Local Finance Board was set to hear the matter in May. However, due to new information submitted by both Hudson Regional Hospital and BMC Hospital LLC before the meeting, the board opted to postpone the matter a month. While it was on the agenda at the June and July meetings, the board did not act, and the application did not appear on the Local Finance Board’s August or September meeting agendas.

However, CarePoint’s new announcement may spell the end for the eminent domain process.

Bayonne Mayor James Davis praised the announcement, without mentioning eminent domain: “From day one, I have remained steadfast in my belief that the City of Bayonne must always have a hospital that is responsive to the needs of our residents. CarePoint’s conversion into a nonprofit will allow the residents of Bayonne to continue having the broadest range of quality healthcare services made available to them. I look forward to working with CarePoint to ensure that the needs of our community continue to be met.”

City Council President Sharon Ashe-Nadrowski, who opposes eminent domain against the Bayonne Medical Center property, will likely try to hold a vote on the ordinances at the next council meeting: “I only ever had two goals: To ensure quality healthcare for the residents of Bayonne; For the City not to incur any debit for a private enterprise. It has always been my position that the City should have never been involved as it was a dispute between two private corporations. With this announcement I would hope the Mayor and the rest of the council will support me next time I call to vote down the hospital bond ordinance. In my position as Council President, I will continue to watch to make sure that CarePoint delivers on their promises to the Bayonne residents.”

Other reactions

Kimberly Wallace-Scalcione, a spokeswoman for Jersey City Mayor Steven Fulop, said in a statement: “Christ Hospital and CarePoint have been critical partners with the city and the community before and during the pandemic, ensuring residents throughout the area have access to the top-quality healthcare they deserve, and so if transitioning to a nonprofit organization is the best way to further the life-saving services they offer, then we will, of course, support that. This only strengthens the importance of Christ Hospital for the entire community.”

Hudson Regional Hospital was not convinced.

“We are relieved that CarePoint has acknowledged that there is no longer any point to continuing the charade that eminent domain can be used to condemn our property at Bayonne Medical Center so it can be turned over to an inexperienced operator and CarePoint can walk out with tens of millions,” said spokesman Ron Simoncini. “However, we are appalled that it has drawn up a new chapter in which it poses as rescuing its acute care facilities by converting to not-for-profit status. If they need rescuing, it is from CarePoint, not by CarePoint. This announcement follows the form of previous CarePoint proclamations, none of which came to pass.”

Hudson Regional Hospital asserted CarePoint does not have the right to continue to operate the hospitals after it converts to a nonprofit.

“Given the history of CarePoint, it is impossible to believe that this is a selfless act conceived to benefit healthcare in Hudson County,” Simoncini continued. “Each of CarePoint’s recent steps has led to the deterioration of its healthcare facilities, exorbitant out of network costs for services, reduction in its practice areas and deferral of critical services to consultants and third parties. Our prediction is that CarePoint’s plan is again to burden the County with the costs and uncertainties of a healthcare market it is ill-prepared to enter, just so CarePoint can pilfer as much cash as possible.”

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.