Hudson County Hospitals Facing New Criticism Over Financial Practices

Lilo H. Stainton | July 12, 2019 | Health Care
As dozens of layoffs loom at CarePoint Health, state’s largest healthcare union questions whether stricter state monitoring could have prevented them

Most of the jobs losses are expected to be at Bayonne Medical Center.
A trio of for-profit hospitals in Hudson County is again facing criticism for its financial operations, this time from New Jersey’s largest healthcare union, which has raised a red flag over the likelihood of dozens of layoffs.

The union announced that more than 40 nurses, technicians and other staff would lose their jobs; CarePoint Health System, which operates acute-care facilities in Bayonne, Hoboken and Jersey City, confirmed the layoffs but declined to provide specifics. The news has prompted leaders at the Health Professionals and Allied Employees to call on the state to step up its oversight of CarePoint and other for-profit hospitals.

HPAE argues that CarePoint’s decision results in part from worrisome fiscal practices that were flagged by the State Commission of Investigation, which issued a report in March highlighting how the hospitals — Bayonne Medical Center, which is expected to absorb the bulk of the layoffs, Hoboken University Medical Center and Christ Hospital, in Jersey City — paid $157 million in fees to management consultants who lacked staff or other clients, but had ties to the hospitals’ three principal owners.

Others suggest that the job actions are unrelated to the commission’s findings, and that changes in the healthcare landscape and the role of hospitals overall drove them instead.

SCI did not allege any impropriety or illegality in CarePoint’s financial dealings, but said the arrangements raised questions about its fiscal stewardship. In its report, the commission — which investigates charges of waste, fraud and abuse — urged the state Department of Health to take steps to further strengthen hospital-reporting requirements and expand its capacity to track hospitals’ finances and operations; it did not call for changes at CarePoint itself.

Donna Leusner, director of communications for DOH, said the state has strengthened its reporting requirements several times in the last few years and “anticipates proposing additional financial transparency rules in 2019,” a process that involves stakeholder engagement and public input. She declined to comment on the impact of the SCI report on these changes or other reforms.

“All hospitals, including CarePoint, are required to follow those rules,” Leusner said.

Tracking CarePoint’s fiscal operations

When it comes to CarePoint in particular, the department has been tracking its fiscal operations closely; the DOH has several systems designed to help it monitor hospital finances. DOH Commissioner Dr. Shereef Elnahal told state lawmakers in April that department leaders were talking with CarePoint executives “basically weekly… to get updates on their financial health and their ability to meet the healthcare needs of the community.”

That process continues, although Leusner declined to provide specifics on the outcome; monthly financial statements from hospitals are not available under the state’s open public records law, she said, and additional fiscal details provided by CarePoint are confidential, the health system has claimed. “The Department of Health continues to meet with CarePoint to ensure access and quality of care for all patients,” she said.

But the union, which represents 1,200 CarePoint employees, believes money dispersed through a complex web of corporate entities connected to the three principal owners — Vivek Garipalli, James Lawler and Jeffrey Mandler — could instead have gone to maintain staffing at the current level.

“Rather than heed the warnings of the report, CarePoint is relying on prior practices of reducing their healthcare workforce to protect the financial interests of the corporate owners,” said Debbie White, a nurse who is president of HPAE.

Three years ago, the company proposed 90 layoffs, according to media reports — although some workers may have retained their jobs or been switched to part-time status — and it has cut a number of positions from various departments and outpatient clinics in the years since.

Fewer patients

According to Jennifer Morrill, CarePoint’s assistant vice president for corporate communications, the layoffs are a result of changes within the healthcare landscape — like a growing focus on keeping people healthy and out of the hospital — that have depressed patient volumes at acute-care facilities in New Jersey and nationwide.

“Hospitals have the financial responsibility to (hire) staff to (meet) the patient volume they serve and to adapt staffing to meet the patients where they are — in the hospital or in outpatient and ambulatory settings,” she said.

“Earlier this year, we initiated a rigorous and thoughtful process to review our hospitals for workforce efficiencies and care management,” Morrill continued. “While we have identified a number of efficiencies, it is important to note a majority will be achieved through a reduction in (employment) agency usage, a reduction in overtime and closing select open positions — as well as a modest rightsizing.”

“While never an easy endeavor, we have utilized the most extreme caution and care to develop a plan that preserves our mission of providing the highest quality healthcare for the Hudson County community and maintains operational efficiency,” she added.

Union calls for financial watchdog

But since job losses can signal financial instability or changes in ownership — Memorial Hospital in Salem County notified hundreds of employees they could lose their job when the hospital was sold last year (most workers were expected to be rehired) — the development has sparked new questions about the state’s oversight of CarePoint. White, with HPAE, urged the state to appoint a financial monitor to implement SCI’s recommendations and serve as a watchdog with for-profit facilities like the CarePoint hospitals.

“Our union’s warning cries regarding for-profit hospital finances were ignored by the Christie administration. Now we are not alone in sounding the alarm, as the state’s own investigation has alerted us all to questionable practices,” White said.

New Jersey’s oversight of for-profit hospitals is governed largely by a 2014 law designed to improve transparency of hospital finances, which evolved in response to questions about fiscal operations at the former Meadowlands Hospital Medical Center, in Secaucus, a for-profit facility with a colorful history that was sold in late 2017 and rebranded as Hudson Regional Hospital. Some have said the law is inadequate and favored a stronger version, which former Gov. Chris Christie vetoed.

At a budget hearing in April, state Sen. Sandra Cunningham (D-Hudson) asked DOH about its response to rumors that CarePoint was looking to sell its facilities in Bayonne and Jersey City; Morrill said Thursday that the ownership structure remains the same at both hospitals.

Elnahal said the department was in close contact with CarePoint as part of its duty to protect the health of the community. “Both for Christ and Bayonne, we are monitoring the situation very closely,” he said, pledging to “manage whatever outcome happens.”