The battle centers on the financial health of for-profit CarePoint Health, the current operator of BMC.
A pair of bills meant to influence the outcome of a fight over the Bayonne Medical Center died at the end of the last legislative session, leaving the years-long political, public relations and legal battle at a stalemate.
The dispute centers on the financial health of for-profit CarePoint Health, the current operator of BMC. Hudson Regional Hospital, the current property owner, is trying to push CarePoint out, alleging a failure to pay rent. CarePoint, which has teamed up with BMC Hospital LLC to increase its ownership stake in the hospital’s operations from 9.9% to 49%, told NJBIZ in December that it is “current on all rents and other payment obligations.”
Bayonne Mayor James Davis attempted to use eminent domain to seize the property and hand off operations to BMC Hospital LLC, but the efforts died in the city council. “The goal of the City of Bayonne is to pursue all available avenues for maintaining a community hospital to serve our residents,” the mayor said in May.
In February 2020 just before the onset of the COVID-19 pandemic, the New Jersey Department of Health announced that it was dispatching a state monitor to oversee the finances of all three of CarePoint’s Hospitals: Bayonne Medical Center, Christ Hospital in Jersey City and Hoboken University Medical Center in its namesake city. The monitor has the authority examine the finances for the limited liability company that oversees Christ Hospital, and the financial health of any CarePoint-related entity. State health officials did not return numerous requests for comments for this story.
CarePoint was founded in 2013 by Vivek Garipalli, a co-founding chief executive officer of the Tennessee-based Clover Health, which offers Medicare Advantage plans. Garipalli was credited with rescuing all three Hudson County hospitals from the brink of financial ruin after purchasing the facilities between 2008 and 2012.
But problems have emerged. A 2019 report from the State Commission of Investigation found that CarePoint has paid $157 million to shell management companies owned by CarePoint’s owners, even though those management companies had no employees and limited operating expenses.
Legislative Intervention
A measure sponsored by state Sen. Sandra Cunningham, D-31st District, who represents Bayonne, would have required property owners to get approval from the New Jersey Department of Health before evicting, terminating or refusing to renew the lease of a hospital operator. Violators would face a $1 million fine.
The bill has been widely reported as being aimed at CarePoint. Cunningham declined to provide comment for this story. CarePoint enlisted the lobbying firm Optimus Partners – led by Phil Norcross – to push the Cunningham measure.
In an emailed statement last month, Optimus President and CEO Jeffrey Michaels, said the firm agrees that the Health Department “should have final say prior to commercial real estate interests taking adverse action against a hospital and patient access, especially in the middle of a pandemic.”
Former Senate President Stephen Sweeney told reporters that the bill is indeed directed toward CarePoint, and for good reason he said.
“We want to make sure that they don’t sell the real estate out from underneath the hospital as it’s moving to a nonprofit,” he told reporters following a Senate voting session in December before lawmakers broke for the holidays. “Bayonne needs its hospital in a very serious way.”
Meanwhile, CarePoint is attempting a conversion to nonprofit status and strongly defended those efforts. In an email to NJBIZ, the company said that it “opens up new opportunities for hospital staff, patients and the greater Hudson County community.”
“A nonprofit is the best way to sustain their current patient mix – around 60% of Medicare and charity care at Christ Hospital and Hoboken University Medical Center,” CarePoint added. “These hospitals will need government help and charitable foundations to sustain them in the long term.”
CarePoint’s decision in October last year to transition to a nonprofit came as several bidders were eyeing CarePoint’s properties, such as RWJBarnabas Health and KPC Global Management, which were both looking at HUMC and Christ Hospital.
Hudson Regional said last month that the Cunningham bill is “unnecessary and superfluous” because the Health Department [is] already involved through the certificate of need [CN] process. “It goes both ways: a licensed facility requires CN approval to close, modify or curtail the licensed services [and] the CN process is not limited simply to the initiation of services,” HRH said in an email to NJBIZ. “So, a judicial order of eviction would be restrained by a judge in a heartbeat if we attempted to lock them out without DOH’s say-so. We’ve never disputed that and, in fact, we already filed a CN application concurrently with our lawsuit seeking that very approval.”
Then-Assemblyman Nicholas Chiaravalloti, who was also in Cunningham’s district, introduced another bill meant to draw out CarePoint’s efforts to transition to a nonprofit. It would have required any for-profit hospitals in New Jersey to get approval from the state health department for any bid to transition to a nonprofit status.
Chiaravalloti, who dubbed Cunnigham’s bill the “CarePoint Protection Act,” told NJBIZ in December that “there’s nothing virtuous” about CarePoint’s nonprofit goals.
“I think there are more questions. I don’t understand why it’s been proposed. I don’t see any benefit with it.”
The former state Assemblyman’s proposal would have set into law a state requirement that a for-profit hospital get a certificate of need from the state Health Department to transition to a nonprofit status.
Ron Simoncini, a spokesperson for Hudson Regional, in October dismissed the notion that CarePoint would “rescue its acute facilities by converting to not-for-profit status.”
“If they need rescuing, it is from CarePoint, not by CarePoint,” he said. “Each of CarePoint’s recent steps has led to the deterioration of its health care facilities, exorbitant out-of-network costs for services, reduction in its practice areas and deferral of critical services to consultants and third parties.”
