In Sorting Out Future of Newark Hospitals, Saint Michael’s Looms Large

Andrew Kitchenman | March 25, 2015 | Health Care
State weighs sale to for-profit operator while effort to save hospital gains city council backing

Dr. Alan Klukowicz, a doctor at Saint Michael’s since 1979, described how deeply the hospital is tied to the Newark community.
The state government will have a large say in which hospitals live or die in Newark, and the first whose fate may be determined is Saint Michael’s Medical Center, currently being considered for sale to a California for-profit operator.

A recent report by Navigant Consulting recommended that Saint Michael’s, along with East Orange General Hospital and Newark Beth Israel Medical Center, be converted from full-service inpatient hospitals to outpatient emergency and ambulatory care centers. The report also said that the state expand state-owned University Hospital.

The closure of any inpatient facilities will have serious political ramifications, a point that was highlighted yesterday as the city council voted unanimously to oppose closing Saint Michael’s and support its sale to Prime Healthcare. Both council members and Saint Michael’s supporters — many of whom are unionized hospital workers — said losing the hospital would have a devastating impact on the city’s economy and its residents’ health.

“Know that we are fighting alongside you, with you, and in the front with you,” Councilwoman Gayle Chaneyfield Jenkins told hospital workers.

The state Department of Health and Attorney General’s Office have been weighing the sale of Saint Michael’s since Prime announced its bid for the hospital in December 2012. While the state doesn’t have a deadline to make a decision, supporters of the sale to Prime have expressed concern about the effect of delays on the chances of completing the sale. So far, Prime has maintained its commitment to buy the hospital for $43 million, which would still leave the state with some $190 million in unpaid debt from the hospital.

Supporters for keeping Saint Michael’s and the other hospitals open as inpatient facilities will have to overcome the large challenges laid out in the Navigant report, which include growing operating losses and a decline in inpatient stays in the area. The inpatient decline has been occurring nationally, as more healthcare is delivered in outpatient clinics.

The state asked Chicago-based Navigant to examine whether services at the hospitals are either duplicative or insufficient, as well whether there is unused capacity. If Navigant found that to be the case, the state asked it to recommend the plan for consolidation or regionalization of services.

[related]State officials have described the report as a tool in making future decisions about the healthcare delivered to the Newark area.

The report recommended building up University Hospital as a regional medical center. While University currently has the most troubled finances of any of the city hospitals, the state has repeatedly made legal commitments to maintain the hospital.

Both University Hospital and Saint Michael’s are in line to see steep cuts in state aid to help cover the costs of offering charity care. Total state aid to University Hospital would fall by $19.6 million in Gov. Chris Christie’s proposed budget, while Saint Michael’s would lose $10.7 million. State officials have said the cuts were due to a statewide 40-percent decline in charity care as a result of the expansion of Medicaid last year.

For supporters of Saint Michael’s, their greatest hope may be for the Navigant report to have a similar impact as a report that it completed in 2011 regarding Hudson county hospitals: little to none. That report called for a reduction in the capacity and potential consolidation between Jersey City Medical Center, Hoboken University Medical Center, and Christ Hospital. Instead, Jersey City Medical Center remains in fierce competition with Hoboken and Christ, which are both owned by for-profit CarePoint Health.

The council hearing yesterday showed the personal ties that hospitals build with the areas they serve — and the difficulty that public officials have in agreeing to see them close.

Newark Councilman Augusto Amador said the closure of Saint James and Columbus hospitals in 2008 was “probably the most painful experience that I’ve had” in 16 years on the council.

“It was a very painful exercise — it hurts not only the employees, but essentially it hurts the people that we represent,” he said, adding that Navigant’s recommendations were “related to political interests” and had “nothing to do with the reality of the city of Newark.”

Amador also said that on two occasions, doctors at the hospital provided services that saved his life.

“If you close the hospital today, five or 10 years from now, we’re going to have to pay the price,” he said, adding that the city’s population is rising.

Newark Mayor Ras Baraka has said he supports maintaining the current jobs and services at Saint Michael’s. But at a November press conference, he joined opponents of Prime in asking that the state place a series of conditions on the sale of Saint Michael’s. These conditions would include: a commitment to keep the hospital open longer than the five years that Prime has committed to; a mandate that the hospital stay in insurance networks; and an agreement that it would cooperate closely with Newark Beth Israel and University Hospital. Baraka attended yesterday’s council meeting, but declined to speak.

While JNESO, the union representing Saint Michael’s nurses, supports the sale to Prime, the for-profit operator has drawn opposition from the state’s other large nurses union, the Health Professionals and Allied Employees (HPAE). That union represents University Hospital nurses.

Prime opponents have questioned its track record in California, saying that it has closed unprofitable units, been the subject of a federal investigation into its billing and coding practices, and relied on ending contracts with insurers. But Prime officials have pointed out that they’ve bought many troubled hospitals, invested in capital improvement and haven’t closed any of them. They allege that opposition from some unions in New Jersey is linked to labor disputes in California.

JNESO members helped fill the council chambers yesterday. Both hospital workers and city council members called for labor unions to be united in support of keeping Saint Michael’s open.

Hospital doctors and executives also spoke in defense of maintaining the institution.

Dr. Alan Klukowicz, a doctor at Saint Michael’s since 1979, described how deeply the hospital is tied to the community citing his own experience. In addition to being born there 63 years ago, he said: “I had my tonsils out there; I had my kidney stones out at Saint Michael’s … Saint Michael’s is more than just a hospital, it’s part of the community of Newark.”

Saint Michael’s President and CEO David Ricci said he’s been “overwhelmed” by community support.

“Without choice, and without competition, you don’t have the opportunity to go where” you want, Ricci said.