Governor Appoints Monitor for Newark’s Troubled University Hospital

Alarms sound over shortcomings in quality of care and financial soundness. Murphy moves swiftly to tackle problems

University Hospital in Newark
Trouble at University Hospital in Newark, the state’s only public acute-care facility, has been brewing for a while, with various monitoring agencies and advocacy organizations sounding the alarm about the quality of care, financial stability, and its role as a community institution.

On Friday, Gov. Phil Murphy responded, signing an executive order that required the state Department of Health to appoint a monitor to oversee the hospital’s affairs indefinitely. DOH Commissioner Dr. Shereef Elnahal selected longtime healthcare executive Judy Persichilli, a nurse and New Jersey Health Care Quality Institute board member.

“Given the scope of the problems found at University Hospital, these immediate actions are necessary to ensure the facility can continue providing the highest level of care to the community while it gets its fiscal house in order and improves its health care quality,’’ Murphy said.

Local officials, healthcare advocates and the nurses’ union embraced the move, and hospital officials said they were eager to work collaboratively with Persichilli. University Hospital, which has nearly 500 beds, is slated to receive more than $100 million this year in state funding, including more than $46 million in charity care to help pay for its high number of uninsured patients.

Judy Persichilli has been appointed acting president and CEO of University Hospital.
Elnahal said the goal is to help University Hospital maintain its status as the region’s Level 1 trauma center, designed to address critical injuries and mass casualty incidents like the Paramus school bus crash. Persichilli will focus on ensuring quality of care, implementing best-practice protocols and installing a quality officer, and improving the hospital’s economic sustainability to reduce its dependence on state funds, according to the commissioner.

Facility has ‘talented clinicians’

“We are flexible and open to any solution that might work,” Elnahal said, noting that the facility has talented clinicians and that he, personally, would not be afraid to seek care there. “The goal is progress. We expect to see progress in a matter of a month and continued progress over the next year.”

In his order, Murphy flagged a March 2018 report from the nonprofit watchdog The Leapfrog Group, which gave University Hospital a failing grade for its efforts to prevent patient falls, surgical deficiencies, medical errors, and problems with staff communication and response. Elnahal attributed this to a lack of investment in management and staff, which has led to poor morale — things he said Persichilli is well suited to address.

The governor also raised concerns about a downgrade in the hospital’s bond-rating announced in July by Fitch Ratings, which dropped it four notches to “BB-“ status due to its pension liability, “weak leverage position” and “thin operating performance,” the EO noted. Despite this notice, and the hospital’s heavy dependence on state dollars — including more than $43 million for staff on the state payroll and $10 million to support the reinsurance fund — the board agreed to renew the CEO’s contract with a $900,000 annual deal for three years.

The state is also unsettled by University Hospital’s push to shutter certain pediatric emergency units, services Newark officials and some healthcare advocates feel are essential to the community. According to the governor’s EO, hospital officials told the state in late 2017 they hoped to close their Pediatric Emergency Room and Pediatric Intensive Care Unit, and filed an application to close the latter in April. But before the state could rule on the request, Murphy said the hospital “took steps to dramatically reduce” the number of beds available for this type of care, and transferred some patients to Newark Beth Israel Medical Center.

Nurses got layoff notice

These steps raised alarms for healthcare workers, including some nurses who received layoff notices, according to officials with Healthcare Professional and Allied Employees, the state’s largest healthcare union. They also worried Newark Mayor Ras Baraka and Essex County Executive Joseph DiVincenzo Jr., who feared that University Hospital was not living up to its agreement to provide community services.

“The appointment of a monitor will assure that University Hospital gets its house in order,” Baraka said, praising the governor for his “swift action.”

Ann Twomey, HPAE president, also applauded Murphy’s response, but urged the monitor to seek a long-term solution for maintaining a full suite of services at University Hospital. “The priority of a monitor must be to provide a course for the hospital to be a viable public institution that will continue to meet the needs of the most disenfranchised and neediest in our communities served by the hospital,” she said.

University Hospital was technically established in 2012, when it was split off during the restructuring of the former University of Medicine and Dentistry of New Jersey, an eight-school medical education system that had overseen the facility for nearly four decades. But the hospital dates back to the 1880s, as City Hospital, and was transferred to UMDNJ in 1968 through an agreement that required it to provide comprehensive health programs and access to essential services for city residents. That duty remains, according to the state, and the facility is still a teaching hospital for Rutgers Biomedical and Health Sciences, including students at Rutgers New Jersey Medical School.

Years of financial struggles

The facility has struggled economically for years, in part because of the challenging mix of its patients, many of whom lack insurance. The independent hospital had some success paying down its deficit and trimming costs in 2014, officials said. At the time, they attributed that in part to consulting advice provided by then-Barnabas Health, which in 2015 merged with Robert Wood Johnson University Health System.

A spokesperson for the new combined entity, RWJBarnabas, now the largest healthcare network in the state, said the system does not currently have any formal relationship with University Hospital. RWJBarnabas also operates Newark Beth Israel — the hospital that has been receiving some of University’s pediatric patients, according to the EO.

University Hospital president and CEO John Kastanis said in a statement that the facility has made significant strides recently, but serious work remains. “In the last several years, University Hospital has taken a variety of steps to address financial challenges while providing access to high-quality care for all patients. The hospital has made changes to its administrative and clinical leadership, and diligently implemented new programs focused on patient safety and quality of care,” he said.

“We recognize there is much work left to be done and look forward to working collaboratively with Ms. Persichilli, as well as our state and local elected officials and regulatory agencies, to accelerate progress at University Hospital,” Kastanis added.

Persichilli is now president emerita of CHE Trinity Health and previously worked as president and CEO of Catholic Health East, and CEO at St. Francis Medical Center in Trenton for eight years. She serves on the boards of several healthcare organization and was inducted into the New Jersey State Nurses Association Hall of Honor in 2006.

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