CarePoint Health has announced that it has completed its transition from a for-profit healthcare system to a non-profit. The non-profit entity now owns a majority interest in CarePoint’s three hospitals including: Christ Hospital, Hoboken University Medical Center, and Bayonne Medical Center.
This follows the donation of CarePoint founder and Clover Health CEO Vivek Garipalli’s majority interest in the three hospitals to the non-profit. The formation of the non-profit led by CEO Dr. Achintya Moulick was originally announced in October of 2021, amid a battle over the future of the land ownership and operations of Bayonne Medical Center between Hudson Regional Hospital of Secaucus and BMC Hospital, LLC.
‘Maintaining critical care’
The non-profit’s funding will allow CarePoint to maintain critical care for Hudson County’s underserved populations and “ensures community control” of the healthcare system moving forward. An official announcement of the new board members and non-profit mission statement will follow, according to CarePoint.
“We are all eternally grateful that CarePoint Health’s hospitals have been preserved through the years with an unwavering commitment to serve the community especially during the COVID pandemic where hundreds of thousands of residents received treatment and care,” said Moulick.
“This transition will allow our teams to continue to provide advanced and equitable care to the diverse, minority populations across the Hudson County community. Through the number of partnerships and initiatives over the last two years, we have built an advanced healthcare system as a leader and innovator in medicine with much more to come.”
According to CarePoint, the transition to non-profit control opens up a wide array of opportunities to support Hudson County’s underserved patients moving forward. CarePoint Health employs over 3,000 people in Hudson County and continues to care for a population that is 80 percent African American and Hispanic with a high percentage of uninsured and Medicaid patients, especially at Christ Hospital and Hoboken University Medical Center, where they make up approximately 60 percent of the current patient mix.
“I’m honored to be leaving the healthcare system in the hands of a physician leader and diverse management team greatly experienced in working with our minority patient population,” Garipalli said. “While this donation is the official end to my ownership of CarePoint Health, I look forward to cheering from the sidelines as the newly formed non-profit continues to care for, sustain, and grow the hospital system to provide equitable care in Hudson County for many years to come.”
Hudson Regional Health responds
While CarePoint was in a celebratory mood, Hudson Regional Hospital, the owner of the land under Bayonne Medical Center, rebuffed CarePoint’s actions. Hudson Regional has been battling over the operations of the hospital since it purchased the land in 2021, as CarePoint seeks to have BMC Hospital, LLC operate the hospital instead.
In response to CarePoint’s announcement, Hudson Regional questioned how the transfer was completed when approvals from the state Department of Health would have been needed. Hudson Regional added that CarePoint also needed permission from the landlord of Bayonne Medical Center, them, to have proceeded as such.
“Today’s victory lap announcement by CarePoint is puzzling, and potentially unlawful because the Department of Health has previously stated that a transfer of the CarePoint ownership interest to a non-profit would require certificate of need approval, and no such approval has been announced,” said Hudson Regional Hospital in a statement.
“Further, we own the Bayonne Medical Center property and facility and are CarePoint’s landlord. The lease requires CarePoint to obtain our permission to change the controlling interest in the tenant, which they did not even bother to request, and thus has not been granted.”
According to Hudson Regional, there may be more litigation on the way, in addition to what is already ongoing.
“All today’s announcement accomplishes is to spawn more legal disputes and regulatory entanglements. Furthermore, this announcement is not what it seems to be at first glance and is, in fact, nothing more than a giant tax deduction for CarePoint’s wealthy owners. CarePoint has defaulted in its leasehold obligations at Bayonne Medical Center, one of three hospitals it operates that it acknowledges are in financial distress, but only because its ownership has extracted $160 million in bonuses and distributions according to a State Commission of Investigation Report. Rather than re-invest that money into the hospital chain’s future, CarePoint has not left a realistic path forward for the resulting non-profit and is instead seeking to take a tax write off as it dumps its obligations on the public and its creditors.”
Funding and stability questions raised
Hudson Regional questioned the stability of the hospital without private ownership.
“This is not the ‘gift’ it is portrayed to be of Vivek Garipalli’s shares to the public; this is an attempted escape of liabilities,” Hudson Regional said in a statement. “With its ownership having taken their money and walked away, CarePoint has not identified a source of operating capital on a going forward basis and it will now be left to the public to pick up the pieces. How will CarePoint’s hospitals be funded and operated going forward without private ownership? The State Local Finance Board, the City of Bayonne Council, and the Department of Health are among the public entities that have expressed a desire to protect the future of these hospitals. It is not clear how those interests will be protected without a stable and well-funded source of ownership.”
Additionally, Hudson Regional also cast doubt on BMC Hospital, LLC, founded by the principals of surgery-center chain Surgicore, and its ability to operate the facility: “As to Bayonne Medical Center, CarePoint’s proposed successor operator, Surgicore, has not filed complete financial reports that remotely justify any faith that it can operate this facility.”
CarePoint’s completion of its transition to a non-profit comes after the State Health Planning Board delayed the transfer of 39.1 percent of ownership of the operations of Bayonne Medical Center to BMC Hospital, LLC. The entity already owns 9.9 percent, having paid $4 million for the total 40 percent. However, the board delayed that transfer pending the completion of the transition to a non-profit and the submission of a new application with the entity for state approval, which would be heard at the earliest at the State Health Planning Board’s June meeting.
The future of Bayonne Medical Center?
Meanwhile, at the local level, an eminent domain bid by Mayor James Davis with county support to condemn the hospital property and allow BMC Hospital, LLC to become the land owner and hospital operator has stalled. The Bayonne City Council continues to vote 3-1 to postpone the ordinances waiting on the Local Finance Board, however, without four votes the ordinances are doomed to fail. Unless, that is, whoever takes the seats of City Council President and mayoral candidate Sharon Ashe-Nadrowski and outgoing Second Ward City Councilman Sal Gullace on the council decides to vote for the ordinances, giving them enough votes to pass. But that is assuming all three of the other incumbent councilman are re-elected, including First Ward City Councilman Neil Carroll, Third Ward City Councilman Gary La Pelusa, and City Councilman At-Large Juan Perez.
While it may not have been mentioned as much as other issues on the campaign trail, the future of Bayonne Medical Center and who will own and operate the hospital will be deeply impacted by the outcome of the Bayonne municipal election on May 10.
For updates on this and other stories, check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at firstname.lastname@example.org.