Unorthodox New Buyer Emerges for Beleaguered Meadowlands Hospital

Lilo H. Stainton | September 8, 2016 | Health Care
Application to purchase Hudson County hospital in Secaucus may raise more questions than it answers

A New York man who owns a plastic surgery center in Hackensack hopes to take over the troubled Meadowlands Hospital Medical Center in Secaucus, but the sale process could prove just as controversial as the facility’s recent past.

Yan Moshe has been working with the hospital’s current ownership since early May to structure a deal to purchase MHMC for a total of $12.2 million — $5.4 million less than it sold for six years ago — according to documents he filed with the New Jersey Department of Health. And it could take until next spring, or longer, before state regulators decide whether to approve the deal.

Critics of Meadowlands Hospital urge state officials to proceed cautiously, given the operation’s checkered history. MHMC has faced state fines for late and missing government filings, federal tax liens and been subject to dozens of safety inspections. Legal disputes with insurance carriers and the healthcare union have also drained resources, and business at the hospital has dwindled significantly in recent years as its quality rankings have dropped. An effort launched in late 2014 to attract Russian mothers who pay cash to deliver babies at the facility — making them eligible for U.S. citizenship — failed to generate much new business.

Despite these difficulties, the for-profit hospital — one of nine in New Jersey — has directly paid investors at least $9 million and spent another $8 million on equipment and services provided by other companies in which they have an ownership stake.

In an application filed with DOH in July, Moshe repeatedly pledged to maintain the current level of services and staff at the 204-bed facility. He also promised to invest $3 million in facility and equipment upgrades within the first five years, recruit new primary care physicians, and contract with additional commercial insurance providers. Moshe said he is the full owner of the corporate entity seeking to take over the hospital, NJMHMC LLC.

But Sen. Joseph Vitale, D-Middlesex, who has been critical of the hospital’s operations, said these promises don’t inspire much confidence. “The status quo is not good for the community,” he said. “The current level of service is not outstanding. What does the community gain by having another ownership team maintain this?”

Vitale would like more details on what Moshe can do for Secaucus and the surrounding towns. “I’m hoping it’s not just another business venture, without the same type of charitable mission and excellence that is shown by the many surrounding hospitals,” he said. At least a half-dozen hospitals now operate within 10 miles of MHMC.

[related]While he does not predict explosive growth, Moshe cites the potential for new business. The hospital’s current owners have developed a plan for a “Center for Excellence for Orthopedic Surgery” that Moshe believes will attract new patients and he hopes to strike a deal with the Federally Qualified Health Center in nearby North Bergen to provide obstetrics services to their patients, most of whom are covered by Medicaid.

Moshe also references a letter of intent the hospital’s current owners signed with the developers of American Dream, the retail and entertainment complex still under construction near the Meadowlands Sports Complex, “to provide certain healthcare services” and a “network” for employees of the site’s retail stores. Neither Moshe, who lives on Long Island and also runs a real estate firm according to his LinkedIn page, nor his attorney for the project responded to requests for comment over the past two days.

A spokesman for MHA, the hospital owners, Al Gaburo of Princeton Public Affairs, said he was limited in what he could discuss, given the potential sale, but said the current owners believe the process will benefit the community in the long run. “Meadowlands Hospital and the surrounding community would benefit greatly by the opening of the long-awaited American Dream project. We look forward to seeing it come to fruition,” Gaburo added.

Another curiosity is the application’s repeated references to a “Cancer Center Entity.” According to a financial statement for 2013 – the most recent filed with the state; reports from 2014 and 2015 remain outstanding – the current owners entered a joint venture in 2012 to construct a cancer center on the site. The filing does not reveal who else is a party to the deal, but claims MHA received $1.3 million to start construction in 2013, but had not yet formalized the funding agreement two years later. Sources close to the hospital said that although some work at the Secaucus property had begun, no cancer center has been created to date.

Moshe’s application notes the potential of this new business line and suggests he currently has a stake in this entity, noting that if he “still owns an equity interest” at the time of the closing it would require a separate lease with the current hospital owners, who also control a part. But Gaburo said, “Mr. Moshe has no business interest whatsoever in the proposed cancer center at this time.”

DOH Communications Director Donna Leusner also declined to provide more detail on Moshe’s submission. “While application is under review, the Department cannot comment on the specifics of the Meadowlands application,” she said.

The department will be seeking additional information from Moshe, since the application is not technically complete. Once department officials deem it complete, Leusner said the State Health Planning Board has 90 days to provide a recommendation to the health commissioner. The panel serves as a technical advisor to the commissioner on Certificate of Need (CN) applications, which outline the terms for expanding hospital services or transferring a hospital’s assets through a sale, and their process includes a public meeting, she said. The commissioner than has 120 days to act on the board’s recommendation.

Jeanne Otterson, public policy director for the Health Professionals and Allied Employees union, which represents several hundred Meadowlands employees and has been a watchdog on the facility over the years, praised DOH for releasing the incomplete application for public review. (In the past, the policy had been to hold off until it was deemed complete, a process that has taken years with some CNs.)“The department has made a real step forward in terms of transparency,” she said.

Her union would like more information on Moshe’s plans for the facility, its staff, and patients. The application does not clearly address who would be responsible for paying lost wages and benefits now under dispute in a labor trial, she said, and does not spell out how long the new owner would continue to operate at the same level. The CN approved in 2010, when MHA purchased the operation, called for it to continue to provide the same services for seven years. The application also appears silent on the hospital’s current agreement to provide emergency medical ambulance service for Secaucus, a key part of the original CN, she said.

“We would expect to see much more detail on how they would continue to provide for services, staff and the community,” Otterson said.

Additional questions arise from a list of items in Moshe’s application that are not among the items that would be transferred with the hospital. This list of “excluded assets” includes MHA’s ownership stake in the Cancer Center Entity; a license the current owners hold to run a 30-bed rehab facility, which does not appear to be operational; or their stake in a medical realty company based in Newark. Also excluded is a condominium in Harmon Cove Towers, less than a half mile from the hospital, and a business interest in an unknown company called Elite Auto.