Meadowlands Hospital Medical Center has agreed to hire an outside consultant to review its finances and potentially create a strategic plan for the hospital.
The deal with the state Department of Health follows concerns. State senators and union officials had called for an outside monitor for the hospital.
Thegives a wide range of powers to an outside party, who must be hired with state approval.
Under the agreement, the for-profit hospital will hire a nationally recognized management consulting firm with expertise in hospital financial management and planning. The consultant will examine Meadowlands’ financial statements for the past three years, as well as its financial projections and strategic plans.
The consultant must be completely independent of the hospital and be acceptable to the state Department of Health. The hospital’s choice for the consultant must be submitted to the state next month, -- specifically, within 15 days of receiving the May 24 letter regarding the agreement from deputy health commissioner William Conroy.
After the state approves the consultant, the firm will have 60 days to issue a report to the state and the hospital board identifying any areas of concern in the financial statements. If there are significant deficiencies, the hospital may be required to hire a new accounting firm to redo the statements.
In the second stage of the process, the consultant will have 45 days to evaluate hospital financial projections through October 31, 2017. If these projections don’t add up, the consultant will have 90 days to prepare a strategic plan to balance the books by the end of next year.
The hospital also must demonstrate to the state that it has enough cash available to continue operating through 2014.
It remains unclear what would happen if the hospital’s current or future financial plans meet the state’s financial targets.
“It’s premature to say at this what the next step would be,” said Donna Leusner, health department spokeswoman.
The state has previously required outside monitoring at a hospital. In 2002, Memorial Hospital of Salem County was required to have Joel Cantor as a monitor as a condition for keeping the certificate of need that allows the hospital to operate. At the time, the Salem hospital was becoming the first hospital in the state to convert to for-profit status. The monitoring was required to ensure that the hospital maintained its charity care and other commitments.
Meadowlands President and CEO Lynn McVey said the purpose of the agreement was to “provide a layer of transparency to our financial management. We fully expect financial credibility and stability will be clearly exhibited.”
Hospital spokesman Ben Martin said the hospital has been cooperating with the state “on many matters” for two years. The hospital will choose a consultant shortly, he said.
“The hospital’s clinical and care administration, which have been routinely receiving independent recognition for quality and excellence, would not be covered in the review,” Martin said.
The hospital’s status has concerned its nurses’ union, the Health Professionals and Allied Employees. HPAE President Ann Twomey said an independent monitor was needed due to the hospital’s repeated failure to file financial reports with the state, as well as questions about its viability and financial irregularities. She noted that the hospital owners took in more than $8 million in profits at the end of 2011, when the hospital had less than one day’s cash on hand.
“We look forward to the public release of the independent monitor’s report on the financial viability of the hospital, as well as the disclosure of the actual finances of the hospital,” Twomey said.
She said the hospital’s owners have consistently refused to comply with state law and federal labor law, adding that the union hopes the agreement “is the beginning of providing the community, patients, taxpayers and workers with the information needed to hold the owners accountable for transparency.”
HPAE policy director Jeanne Otersen said that if the consultant finds problems with hospital finances, then the state should seek an “alternative owner” or require the current owners to invest more in the hospital.