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Union Hospital to lose more than 800 employees; emergency services salvagedUNION

A preliminary agreement announced last week will let Summit’s Overlook Hospital take over emergency services at Union Hospital, which is slated to close later this year. But the pact won’t staunch the planned layoffs of 820 employees at Union Hospital, which is the latest in a string of New Jersey health institutions that have fallen in the face of rising expenses and diminishing revenue. Earlier this month Paterson’s Barnert Hospital filed for bankruptcy in a Newark court.

“I am pleased to announce that Union Hospital’s board voted unanimously to have Atlantic Health’s Overlook Hospital provide emergency services to Union Hospital’s service area once the hospital is closed by its parent organization, Saint Barnabas Health Care System,” says Atlantic Health Chief Executive Officer Joseph Trunfio in a statement released to employees last week. “Under this plan, Overlook will operate a 24-hour satellite emergency department in Union in a portion of the site of the former hospital facility.”

Atlantic Health, a Morristown-based organization that operates hospitals and other medical centers, plans to hire about 40 people to work in the emergency department at Union, according to a company spokeswoman. Meanwhile, 820 Union Hospital employees are slated to lose their jobs beginning Oct. 1, according to a Saint Barnabas filing with the state Department of Labor & Workforce Development.

Livingston-based Saint Barnabas says the closure—which must still be approved by the state Department of Health and Senior Services—was spurred in part by a $12 million loss in 2006 and a projected $10.4 million loss this year.

“Changes in government regulations, Medicare and charity care reimbursement, and economic forces” have contributed to Union Hospital’s cumulative operating deficit of more than $47 million since 2001, according to a Certificate of Need requesting closure submitted April 1 to the state by Saint Barnabas.

A spokeswoman for St. Barnabas declined to say whether the organization is actively seeking a buyer for Union Hospital or plans simply to exit the facility.

The plan to shutter Union Hospital comes despite legislation, signed June 28 by Gov. Jon Corzine, that expands the ability of the state Health Care Facilities Financing Authority to provide nonprofit health care organizations with loans that would presumably make it easier for financially troubled hospitals to merge with or be acquired by healthier ones.

There are plenty of loan candidates.

Besides Barnert Hospital’s Chapter 11 filing, Bayonne Hospital filed for Chapter 11 bankruptcy protection in April. Last year William B. Kessler Memorial Hospital in Hammonton and PBI Regional Medical Center in Passaic each also filed for bankruptcy. PBI later was bought by St. Mary’s Hospital in Passaic, and the two hospitals were consolidated.

In fact, hospitals across New Jersey are facing an “outright fiscal crisis,” according to an interim report issued in June by the state Commission on Rationalizing Health Care Resources.

“Approximately 7 percent of the nation’s hospitals have closed since 1995,” according to the report, which was commissioned by Corzine. “New Jersey has experienced an even greater number of closures: 17 percent of our hospitals have closed in the same period.”

It goes on to note that many New Jersey hospitals carry a high debt load, compared with hospitals in other states, and consequently do not have the cash or access to credit to fund expensive capital improvements to aging buildings or to invest in new technologies.

Urban hospitals in particular face another threat: the large number of uninsured and underinsured patients who may be unable to pay for treatment yet must still be served by hospitals under state regulations.

Further, as the population in New Jersey and elsewhere ages and more people become eligible for Medicare, many hospitals will likely continue to suffer from cutbacks in the reimbursements they get from the federal program.

This is not the first time Medicare has meant trouble for the Saint Barnabas network. In June 2006, the health care system agreed to pay the United States $265 million to settle allegations that it fraudulently increased charges for Medicare patients in order to obtain enhanced reimbursements.

Under the agreement’s terms, Saint Barnabas did not admit any liability for the alleged actions, but it did agree to take steps to “ensure future compliance with Medicare regulations and policies.”

The 2006 agreement with the federal Department of Justice prompted Fitch Ratings to downgrade more than $800 million of Saint Barnabas’ debt from BBB to BBB, which is the lowest level of investment grade securities. Analysts from the New York-based ratings service recently met with Saint Barnabas representatives but have not yet updated the health care system’s bond ratings, which can affect the hospital’s borrowing costs.

“It’s time we had a state health plan,”said Corzine in a statement last October when he announced the creation of the commission to study health care resources. “We need to take a thoughtful look at whether all our hospitals are necessary, whether they are suitably located to meet health care needs, and whether state funding is being spent efficiently and properly.”

Assemblyman Joseph Cryan, whose district includes Union Hospital, is trying to keep the medical center open, but also acknowledges the problems facing health care institutions statewide.

“Of the 86 main hospitals in New Jersey, 43 percent are losing money,” says Cryan in a statement. “Union Hospital is no exception.”

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