State Approves Sale of Troubled Meadowlands Hospital

Lilo H. Stainton | December 20, 2017 | Health Care
Officials contend that new ownership is only way to preserve local community’s access to acute care

Meadowlands Hospital Medical Center
New Jersey officials have approved the sale of Meadowlands Hospital Medical Center, insisting that transferring the troubled for-profit facility to a new owner is the only legitimate option available to preserve the local community’s access to acute care.

The decision came barely a month after the state fined the previous ownership group another $180,000 for failing to file three years worth of audited financial statements required by law; these fines come on top of more than $440,000 in penalties already assessed by New Jersey officials since the Secaucus facility was last sold in 2010.

In a December 15 letter to the new ownership team, Acting Department of Health Commissioner Christopher Rinn endorsed recommendations from an expert panel that, based on a state analysis of the deal, Meadowlands hospital should be sold to NJMHMC, a company controlled by businessman Yan Moshe, for $12.2 million. Moshe, a Long Island resident who owns several surgical centers in Bergen County, submitted an application to take over the facility in July 2016.

Moshe has promised to maintain the current level of programs and services at the 204-bed facility, improve business by recruiting new patients and specialists, and invest millions of dollars in the years to come.

Cautious optimism

Critics of the previous owners seemed cautiously optimistic on Tuesday, noting they also look forward to more rigorous monitoring and regulatory enforcement from state regulators in the future.

“What I’m hoping for is that this operator will be more accountable to the patients, to the staff and to the community, and that the health department will be much more stringent in its oversight,” said Senate Democratic Leader Loretta Weinberg (Bergen), who has tracked the hospital’s troubles.

“My general reaction is that the health department has not been terrific on overseeing what went on at Meadowlands Hospital,” she said. “There were fines levied but conditions were never really corrected to everyone’s satisfaction.”

The hospital, one of many in the region, has struggled in recent years with declining patient volume, state and federal safety violations, low quality scores and a series of unusual, and sometimes ineffective, efforts to improve revenue — including a plan to lure Russian mothers who would pay cash to have their babies at the facility, where the newborns would automatically qualify for American citizenship.

Concerns remain

The sale involves $5 million of Moshe’s funds and a $7.2 million loan from the previous owners, MHA LLC., a complex corporate structure led by Dr. Richard Lipsky, a pain specialist who has run afoul of state regulators in the past, and hospital executive Tamara Dunaev. Several stakeholders raised concerns about the loan, and the lack of transparency demonstrated by the previous owners, but Rinn said the state’s role was to assess the buyer, not the seller.

“The Department and the [State Health Planning Board] share the commenters’ concerns in this regard, but I am satisfied that the Applicant believes it had adequate financial information available to assess the financial viability of the Hospital. Based on the Applicant’s representations I find that MHMC’s transfer to NJMHMC will afford it an opportunity to maintain and grow needed services,” Rinn wrote, conceding that the state had “limited information” to assess the loan, given the lack of financial disclosure by the previous owners.

In addition, Rinn stressed that Secaucus officials and community members had made clear the importance of maintaining the hospital’s operations when they spoke at a public hearing on the sale in October. The deal will also strengthen the hospital’s “financial viability,” he said, without negatively impacting other acute care facilities nearby.

“I find the proposed transfer of ownership, the only application before me, will preserve appropriate access to health care services for the community, including the medically underserved population, and maintain continuity of services. I am concerned about the sustainability of this facility based on declining census and the availability of services in the surrounding area,” Rinn wrote in his letter to the hospital’s acting chief financial officer, John Grywalkski, who has joined Moshe’s team.

New owner must meet many conditions

To help address the state’s concerns, Rinn included nearly three dozen conditions in his approval, requiring annual updates on potential service changes, capital investments, contracts with health insurance companies, and efforts to improve community health and local primary care, among others. Moshe must also file regular financial disclosure forms, already required by law, and submit paperwork for the three missing years before the DOH will grant him a new license.

The acting commissioner also created a five-year ban on Moshe’s group — formed as NJMHMC — from purchasing goods or services for the hospital from other companies with which he is associated; under the previous owners, hospital leaders paid out some $4 million for medical equipment, computer systems, and other expenses to corporate entities that involved Lipsky, Dunaev or their key partners.

The previous state fines — for delays in filing reports from 2011, 2012 and 2013 — have been paid by the hospital or recouped by withholding Medicaid reimbursements, according to the DOH. The penalties assessed in November — which cover missing statements for 2014, 2015 and 2016 — are being offset by additional Medicaid deductions, a process that is likely to continue through the first quarter of 2018, officials said.

Less clear is how the sale will impact other obligations created under the previous owners; MHA LLC amassed federal tax liens totaling nearly $4.5 million for mishandling payroll taxes and unemployment deductions and was ordered by federal labor officials to repay an estimated $2.5 million in lost wages and benefits to nurses and other employees. A representative for MHA declined to address these questions Tuesday.

Despite the continuing concerns, officials with the Health Professional and Allied Employees union, which represents several hundred Meadowlands workers, struck an optimistic note after the deal was approved. Bernie Gerard, HPAE vice-president, said the group was glad the new owners have “made a commitment to bargaining with the workers for a new contract.”

“Going forward HPAE will work with the Murphy Administration to ensure the NJ Department of Health will hold all hospitals accountable if they violate conditions placed on their sale or operation,” Gerard continued. “Those conditions are set by the Department for the safety of patients, protection of workers and allow the community to know whether their hospital is prioritizing safe patient care.”

Moshe and his attorney did not respond to a request Tuesday for comment on the sale. To complete the deal, Moshe must organize the executive team, recruit a governing board, and establish a community advisory panel, all within the first three months. He must also apply for his own hospital license. DOH officials said there is no timeline for this process; Rinn’s approval expires on December 15, 2022.