University Hospital needs $1 billion overhaul, CEO says

The Newark hospital is said to need a slew of modern upgrades, and it’s getting backing from politicians and health care leaders
Credit: NJ Spotlight News
April 14, 2021: Dr. Shereef Elnahal, president and CEO of University Hospital, Newark at the announcement of state funding for a study of a potential new hospital

A new University Hospital in Newark should include modernized operating rooms, a stroke center, additional space for liver transplants, and innovatively designed areas to better support primary care and help address underlying social issues like poverty, housing challenges or poor nutrition.

That is the vision of Dr. Shereef Elnahal, University’s president and CEO, and it comes with a current estimated price tag of $1 billion. The existing 42-year-old facility — twice the age of New Jersey’s other hospitals, on average — suffers from occasional flooding and regular overcrowding in the emergency room, officials note, and is not built for today’s team-based approach to medicine.

As the state’s only true public hospital with a unique mandate to care for Newark residents, a new University Hospital needs to enable “newer, more innovative models to meet not only the clinical needs but also the upstream social needs that patients have that ultimately determine their health outcomes,” said Elnahal, a former state health commissioner.

Elnahal was joined by Lt. Gov. Sheila Oliver, Newark Mayor Ras Baraka, and other state and county officials on Wednesday to announce their support for a new facility and the $500,000 that Gov. Phil Murphy included in his state budget proposal to conduct a formal “needs assessment” study, a first step in the process.

The 519-bed hospital is the region’s Level 1 Trauma Center — one of three in the state — and functions as a critical caregiver for a large number of low-income and Black and brown residents, and it was nearly overwhelmed by COVID-19 cases last spring. The region has significant health needs, and Elnahal warns it is also facing a mental health crisis as a result of the pandemic.

A ‘critical role’ in NJ

“As we move forward in our recovery from COVID-19, we cannot lose sight of the critical role that our health care system plays in the state,” said Oliver, a longtime Essex County leader. “This proposed funding for University Hospital, for a study to explore a new plan and design for its physical campus here in Newark, is going to help address the hospital’s needs and allow it to improve the delivery of care that our communities so heavily rely on, especially as we endure this pandemic.”

Last week’s announcement also drew Rutgers University Biomedical and Health Sciences Chancellor Dr. Brian L. Strom, whose department includes the New Jersey Medical School, which shares a Newark campus with University Hospital. The medical school has a responsibility to support public health in Newark, codified in the historic 1968 Newark Accords — a settlement created in the wake of an uprising sparked by community displacement resulting from the school’s construction — and that includes support for University Hospital, according to a recent academic analysis of what the authors call “revolutionary” agreements.

Strom said that given the changes in care and technology, “major new investments” are needed to create a “state-of-the-art health care facility to anchor our academic health center in Newark.” A new facility should prioritize patient comfort and attract new providers and students, he said.

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“Our faculty, students, and especially patients, deserve a more modern, aesthetically appealing, and easily accessible facility for practicing, teaching, learning, and most importantly healing,” Strom said. “Now, we can have an opportunity to build a new structure that reflects what an academic health center should look like in the 21st century to best serve its community.”

Elnahal welcomed Strom’s support and said a new University Hospital would help attract academic leaders and medical students, while also better serving the community’s clinical needs. “We’re excited that the chancellor and (Rutgers) university more generally are supportive of this,” he said. The hospital and the medical school currently share “interdependent infrastructure” on campus, Elnahal said, adding that “their support for state bonding on a new building just makes sense for both organizations.”

Strained relations, concern over Rutgers alliance

Relations have at times been strained between the Rutgers biomedical program and University Hospital, along with its Newark supporters, as Rutgers worked to establish an alliance with RWJBarnabas Health, a massive hospital system that operates its own Newark hospital a few miles from University. The arrangement calls for RWJBarnabas to invest up to $1 billion over 20 years to support Rutgers’ efforts to attract top research scholars, retain biomedical graduates and improve medical education; RWJBarnabas will also oversee the clinical work of certain health care providers associated with Rutgers and financially manage these practices.

But this clinical agreement between RWJBarnabas and Rutgers, finalized earlier this year, does not include the Newark practices of professionals associated with New Jersey Medical School, which make up most of the staff at University Hospital. Some elected officials, community members and labor leaders have raised concerns that the Rutgers-RWJBarnabas alliance will drain health care resources from the state’s largest city.

Strom reiterated his commitment to Newark on Friday in a statement to NJ Spotlight News. “My goal as chancellor has always been to build one of the best academic health centers in the country in New Jersey. As the Rutgers Biomedical and Health Sciences Schools based in Newark take the lead in research and education, University Hospital, our principal partner on the Newark campus, will be seizing this opportunity to advance our shared community service and clinical missions to the next level. With sufficient investment I am confident that together we can match or exceed the level of success of our peer academic health institutions across the Hudson,” he said.

While University Hospital has long been a critical resource to Newark’s community, the facility had struggled in recent years with deep-seated financial and operational challenges and a lack of strong leadership or board oversight, according to the 2018 report from a state monitor appointed by Murphy. The culture that resulted failed to prioritize safety and strategic planning, according to the report, and may have contributed to a bacterial outbreak in the neonatal ward that was a possible factor in the death of three infants.

Leadership change came fairly quickly; Elnahal took the reins at University Hospital in the summer of 2019, after stepping down from his job leading the state Department of Health. The previous CEO, John Kastanis, had left the post in December 2018, and the hospital board had tapped the state monitor, longtime hospital executive Judy Persichilli, to serve in the interim. Murphy would later select Persichilli to fill the state health commissioner job vacated by Elnahal, a role she remains in today.

Emergency room staffing, operations challenges

Other reforms will take more time. The report Persichilli produced as a monitor also identified staffing and physical plant challenges, especially in the emergency room, and underscored the importance of University Hospital to the region. Last year, the facility had more than 83,000 emergency room visits and admitted some 15,600 patients; nearly 200,000 people were treated as outpatients.

“Visual observation of the Emergency Room showed an overcrowded, stressed environment. Wait times are far over accepted benchmarks. The psych ER appears too small for the volume of activity,” Persichilli’s monitor’s report reads. “During a time of radical change in healthcare while many hospitals are struggling with future sustainability, the State of New Jersey has assured University Hospital that it has an invaluable role in serving the healthcare needs of Newark and the surrounding community.”

Like other hospitals across New Jersey, University Hospital is reimbursed by the state and federal government for some of its costs — $44 million this year — for treating what is the largest share of uninsured patients among the state’s 72 acute-care facilities. University is also among the roughly three-dozen hospitals that receive state and federal dollars to train medical students. Murphy’s new budget proposal, which lawmakers must approve before the next fiscal year begins in July, also calls for more than $40 million to pay for benefits and other costs associated with its role as a teaching hospital.

Murphy’s budget plan also calls for $8.5 million in capital funding for University Hospital, funding Elnahal said will address the most immediate needs, especially in the emergency room. The hospital is $250 million in debt from a 2015 bond sale, he said, but this funding has largely been used to address emergencies over the years, and there is little left to invest on expansion or renovations.

“We’ve essentially run out of those bond funds,” Elnahal said, prompting the need for short-term state assistance — in addition to the money needed to plan and eventually build a new hospital, a financial arrangement that has yet to be finalized. “We will have to rely on the (current) ER for a while,” he said, “and we need to expand (capacity for) beds and make the existing space more safe and more accommodating to patients and staff.”

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