Mayor: HUMC deal will go through; bankruptcy fraud allegations still loom

9/23/2011 Update:

Mayor Dawn Zimmer announced today that she was confident that the HUMC / HoldCo deal would go through, and is waiting to hear the latest decision from the group of creditors and unions.

She also said that she “found” more money (not state or city tax dollars), but wouldn’t specify from where. We’ll find out soon enough the current outcome in this “act of the play.”

No mention of the “smoking gun”

Mayor Zimmer spoke about the hospital deal as if there were no outstanding issues that could plague this and future agreements. However, there is still a big white elephant in the room: the allegations from Counsel Donald Scarinci – who said the whole bankruptcy was a scheme organized by the hospital to intentionally starve it of operating funds – and make the deal more attractive to the for-profit buyer.

“Sherman said the lawyers discussed a motion filed by Sills Cummis the previous day, which asked that the creditors be granted standing to pursue claims on behalf of Hudson Healthcare. The motion said the Hudson Healthcare board was “hopelessly conflicted” to do so because it was under the control of the hospital authority, which wanted to use the bankruptcy to facilitate the sale of the hospital to a for-profit buyer.

Sherman said Scarinci discussed the authority’s refusal to pay Hudson Healthcare operating funds under the management agreement, as well as its demand that Hudson Healthcare file for bankruptcy to enable the sale.

Scarinci also discussed the circumstances surrounding the resignation of three of the five members of the Hudson Healthcare board and provided Sills Cummis with a related amendment to the management agreement that Hudson Healthcare’s lawyers had not given the bankruptcy court, wrote Sherman, adding that he provided the amendment to the court that same day.

On Sept. 1, Sherman subpoenaed Scarinci, asking for, among other things, nonprivileged communications with Hudson Healthcare, Hoboken and the authority during 2010 and 2011 and documents pertaining to the board resignations, the proposed sale and the bankruptcy.

The same day, Scarinci forwarded to Sherman an e-mail captioned “Smoking Gun” that he said appeared to have been sent to him mistakenly by a member of the hospital authority, Annette “Toni” Tomarazzo, an in-house lawyer at UBS Financial Services, Inc. The e-mail included no message but attached to it was a July 9 e-mail from a lawyer for the authority, Laura Kuntz of Lowenstein Sandler in Roseland, explaining the “logistics” of the board resignations.”

You can read the full article here.

No word on whether an official investigation will take place regarding the alleged fraud, and what impact that would have on the sale.

NJ Gov. Christie dips into state coffers to “save” Hoboken hospital

9/22/2011 Update:

Today, Governor Chris Christie released the following statement after the Hoboken City Council rejected $5 million in funding for Hoboken University Medical Center, effectively forcing the state’s oldest hospital to close within the next few weeks and risking municipal authority default in Hoboken.

“It would appear that there are two primary issues that stand in the way of keeping Hoboken University Medical Center open. First, the refusal by local unions to provide necessary concessions and secondly, the city council’s rejection of $5 million in funding which is vital to securing the hospital’s future.

“It is completely unacceptable that the city council placed local politics ahead of the 1300 employees at the Hoboken University Medical Center and the people in the community who rely on the critical services provided by this hospital. This Administration is not going to allow political bickering to put this hospital in jeopardy and potentially have a negative and irresponsible impact on the city’s finances, which is why the state will contribute the $5 million, if needed, to ensure the Hoboken University Medical Center deal closes and the hospital stays open. With the availability of this funding, it is now up to the unions to ensure the hospital stays open, people continue to have access to emergency services, 1300 jobs are saved, and municipal default is averted.”

Councilwoman Beth Mason added:

“Last night four members of theHoboken City Council took steps to protect the long term viability of Hoboken University Medical Center by asking the Hospital Authority to impose a deed restriction in the sale contract. Furthermore, we asked for transparency in this extremely troubling and secretive process by calling on the Mayor and Hospital Authority board members to release their depositions. Now the Governor wants to support a backroom deal to sell the hospital to one of his biggest campaign contributors for pennies on the dollar. If the Governor wants to reward a campaign contributor he should pay for it, not the taxpayers of Hoboken. Clearly Mayor Zimmer just received a big payback for her early endorsement of the Governor Christie’s re-election.”

Ordinance to bond for $5.5 million fails; HUMC really on life support now

9/21/2011 Update:

After deliberating in a two and a half hour closed session, the Hoboken City Council collectively failed to pass the $5.5 million dollar bond ordinance – which would have contributed additional funds towards the potential bankruptcy settlement with HUMC creditors.

Rather than repeat what “he said and she said” of the night – the bottom line of the debate was that even with the bond approval, it didn’t guarantee anything. It wouldn’t have guaranteed that the bankruptcy settlement would have been approved by the Judge or accepted by the creditors. And even if it was – and the deal went through – no guarantees that the hospital wouldn’t have failed anyway after the fact.

So the required six votes were not achieved, and now it remains to be seen whether the Holdco contract gets revised, and another emergency meeting comes – or the hospital just goes kerplunk, and another scar on Hoboken’s history is in the making.

Mayor suggests bonding of $5 million

9/20/2011 Update 2:

Hoboken Mayor Dawn Zimmer sent the following letter to members of the City Council this afternoon:

“The negotiations to save HUMC (“Hospital”) have reached a critical juncture. For almost two years the Hoboken Municipal Hospital Authority (“HMHA”) has been working diligently to find a strategic alternative to ensure the long term viability of the Hospital and preserve this vital safety net that serves the City of Hoboken and surrounding communities. Since 2007, the Hospital’s management company, Hudson Health Care Inc.(“HHI”), incurred significant unsecured debts to vendors who provide products and services. HHI failed to provide HMHA with timely and accurate information regarding the true fiscal condition of the Hospital. In order to sell the Hospital and secure the future of health care services in Hoboken, retain over 1200 jobs and relieve the City of a bond guarantee of over $51 Million dollars, the Administration is putting forward tomorrow, on an emergency basis, a bond ordinance which is designed to put the City in a position to contribute funds to make a final offer to the HHI Creditors Committee so that HMHA and HHI can proceed with the sale of the Hospital. The City’s contribution, while not required under any law or legislation, is intended to contribute toward the funding necessary to save the Hospital.”

“The maximum amount that I believe is appropriate for the City to contribute is up to $5 million, and that is the funding authority that will be included in the ordinance to be presented tomorrow. Even if the full amount of this authorization were offered to the HHI Creditors Committee, there can be no assurance that they will accept a settlement on terms that can be achieved with this contribution. The members of the Creditors Committee, PSE&G, Sodexo, Cardinal, Metassets and the Hospital’s two unions, 1199J and JNESO, will have to decide if this contribution by the City is sufficient to approve the sale and settlement agreement or whether they would prefer to see the Hospital close. If six City Council members disagree with my assessment and believe that the City’s contribution should be for a higher amount, then the Council should pass a resolution reflecting the will of the Council.

I know this is an unusual approach, but given the enormous importance of this matter to our residents and taxpayers, I believe it is my obligation to present this to the Council in this manner.

If either no bond ordinance receives six votes on first reading, or if the amount approved is ultimately not sufficient to reach an agreement then the hospital will be forced to close, most probably by the end of October.

Under separate cover a cash flow analysis will be sent to you today so that you will fully understand that the hospital simply cannot survive unless a settlement is reached and the sale is completed.

The hearing in federal court has been rescheduled for this Thursday in order to give the Council time to vote on this most urgent matter.

Thank you,
Mayor Dawn Zimmer“

Hoboken Municipal Hospital Authority Preparing for a Tidal Wave

9/20/2011 Update:

It appears that Mayor Dawn Zimmer and the Hoboken Municipal Hospital Authority are going to be hit with a title wave of legal objections to the proposed Settlement Agreement regarding the sale of Hoboken University Medical Center.

Zimmer and company are asking the U.S. Bankruptcy Court to approve a settlement agreement between the Hospital Authority and its creditors. The settlement would see the creditors receive just $5 million of the almost $40 million they are owed by HUMC. Last night, PSE&G filed an objection with the court that alleges the Hospital owes $5 million for its electrical bill alone!

Today, many more of the creditors will follow PSE&G’s lead and file their own objections to the settlement agreement.

Both the bondholders and HUMC Holdco have made it clear they will not contribute any more money toward paying off the creditors. That means there is only one pocket left for Zimmer and company to go to for the money: YOURS!

Sources say that in order to do so the Mayor will have to bond for at least $10 million dollars! Except to bond, she needs six votes on the City Council, but has only five rubber stamps votes.

Ego, politics, in-fighting destructive to Hoboken taxpayers

Sources say Councilwoman Beth Mason has made it known she would be willing to cast her vote in favor of a bond if the Mayor and Hospital Authority agree to take a tougher stance with HUMC Holdco to protect taxpayers and the hospital.

(Related: Top 10 Points of HUMC Concern)

In particular, Mason wants:

1. To hold the buyer to their word that they will keep the hospital open as an acute care facility for at least seven years by inserting a deed restriction in the contract.
2. HUMC Holdco to agree to actually invest the $20 million in hospital improvements as promised.
3. An agreement for the tax abatement to be removed from the contract.

Mason is also asking for any settlement discussions with the City Council to take place in public session and for Zimmer and the Hospital Authority members to agree to release the depositions they gave the creditors lawyers to see if allegations of fraud or wrong doing on their part have any merit.

Rather than take the deal and protect taxpayers, Zimmer is following the playbook of Michael Lenz and Tony Soares, which is refuse to work with Mason at all costs.

Mason has been an advocate for the taxpayers since the City of Hoboken made the ill-advised decision to put taxpayers on the hook for the $52 million in bonds (plus interest) used to purchase the hospital originally. In typical Lenz and Soares fashion, Zimmer would rather close the hospital and bankrupt the city than work with Mason to do the right thing.

Will Zimmer cave and do the right thing for taxpayers? Or will Lenz and Soares get their way and destroy our City just to avoid working with Beth Mason?

Scarinici resigns; alleges fraud in HUMC dealings

9/17/2011 Update:

Another bit of necessary reading in the real-life soap opera called the Hoboken University Medical Center.

Read the scathing statement from Donald Scarinci – the city appointed Counsel who resigned amidst allegations of fraudulent and secretive activities behind closed doors.

Hoboken University Medical Center updates: Depositions & proposals

9/14/2011 Update:

A few interesting HUMC tidbits for you on this Wednesday morning in Hoboken!

Mayor Dawn Zimmer Deposed?

Rumor has it that today is D-Day (as in Deposition Day) for Hoboken Mayor Dawn Zimmer.

We all know how well Zimmer did the last time she was deposed. (Are you wondering if she’ll drop any racial epithets this time around?)

Zimmer and friends are said to be very worried, especially since the U.S. Attorney’s Office was recently paid a visit by someone with inside knowledge of the Hospital Authorities’ backroom deals. Do you think Zimmer will try to call the FBI in on herself again for this leak of “confidential information?”

Sources indicate that Council President Ravi Bhalla, who squashed the delivery of Daniel Bryan and Juan Melli’s emails to the Hoboken City Council – couldn’t stop the Creditors’ Attorney from subpoenaing the emails. Wonder if this will come up when Zimmer is put under oath today?

P3 submits updated HUMC proposal

Additionally – Paradigm Physician Partners (P3) submitted another proposal to the Hoboken Municipal Hospital Authority.

Compare the P3 Proposal to the deal that HMHA accepted from the shell-company HUMC Holdco – and decide which contract you would take if it were YOUR money and YOUR city.

Let’s see – A healthy Hoboken hospital, or no hospital and more condos, hmmm…

Zimmer: $600k payout to pave the way for a Metsch “comeback?”

8/13/2011 Update:

As Hoboken residents are kept in the dark about what is really going on with Hoboken University Medical Center, accidental Mayor Dawn Zimmer’s statements continue to be revealed as attempts mislead the public.

Zimmer has been quoted repeatedly stating that “the Hospital will close if the Bayonne Medical Center does not purchase it.”

But Hoboken411 has learned that Jersey City Medical Center is still willing to purchase HUMC if the current deal falls through.

It is believed that the Jersey City Medical Center’s offer includes transitional money to compensate for the loss of state aid. This money would allow the City and JCMC the time required to go through state approval without asking taxpayers to pay to keep the hospital open. It is also exactly what was recommended in a state report released earlier this month, which advised Jersey City Medical Center and HUMC combining services. Why ignore this offer then?

Jonathan Metsch back on the HUMC radar

The reason is the petty jealousy and revenge typically displayed by this Zimmer Administration, which was perfected by unelected and then defeated Councilman Michael Lenz and Tony “free medical benefits are magically delicious” Soares.

But this time, it stems from old world bad blood between Zimmer Campaign contributor/HUMC Board member/former President of JCMC Jonathan Metsch and current members of Jersey City Medical Center.

Metsch ungracefully left JCMC after leaving it mismanaged and in financial ruin. His ill-will is so bad he is reported to have refused to shake the hand of JCMC representatives when they met with Hoboken Hospital Authority members for dinner to discuss the sale of HUMC. While Toni Tomarazzo is the “front person” for the Hospital Authority it is believed that Metsch really runs the show there from behind the scenes.

Metsch’s friend and confidant Jim Lawler is a partner at the Bayonne Medical Center and will be one of the new owners of HUMC if the sale goes through. Lawler also served as CFO of the JCMC during Metsch’s term as CEO. Lawler was a loyal lieutenant to Metsch even helping to conceal much of Metsch’s incompetence. Now rumors are abound that Metsch could possibly be the CEO of HUMC after the sale is finalized. This is a possible explanation for why the board gave Spiros Hatiras a $600,000 severance when it despite no legal requirements to do so.

Last week, Zimmer was questioned about the severance package. She mumbled something about the “totality of the circumstances,” but never answered the question. The totality of these circumstances point towards Metsch needing to get Hatiras out of the way before the sale was finalized.

And Zimmer used $600,000 of taxpayers’ money to do it.

HHI “bankrupt,” but Zimmer and Bhalla clan hit the jackpot!

8/8/2011 Update:

Dawn Zimmer and her allies keep touting the potential “sale” of Hoboken University Medical Center as a major “victory” for taxpayers. But it is really a big win for Zimmer’s political allies.

Here’s what the Zimmer Administration doesn’t want you to know.

Failed CEO Spiros Hatiras awarded $600K “Golden Parachute”

In a stunning revelation, Hoboken411 has learned that former CEO of Hudson Healthcare, Inc. Spiros Hatiras was awarded a $600,000 severance payment when he tendered his “resignation.”

The $600K payment was doled out despite Hudson Healthcare, Inc. failing to making over $2 million dollars in pension and healthcare payments for nurses and other hospital employees.

This stunt tops last year when Zimmer arrogantly gave 30% raises to her two confident aides on the same day she announced plans to lay off Police Officers!

The Cory Booker Connection

When Hudson Healthcare filed its bankruptcy petition, it was signed by attorney Joseph J. DiPasquale of the law firm Trenk, DiPasquale, Webster, Della Fera, and Sodono. This law firm is noteworthy because it is the same law firm where Newark Mayor Cory Booker was a partner before resigning to take office.

Last October, Booker headlined what Hudson County’s Daily News-rag called a “Big Ticket Zimmer Fundraiser.”

Then in April, Booker’s confidant Clifford Godfrey ran on the Zimmer backed Kids First school board ticket, despite having NO previous involvement in Hoboken!

Godfrey made headlines shortly after the election by getting arrested for allegedly assaulting a female patron at the 200 Lounge. He was also cited for having an outstanding warrant in Newark.

And then there are City Council President/Pay-to-Play King Ravi Bhalla’s ties to Booker. Last year, The Citizen’s Campaign exposed two contracts that Bhalla’s law firm holds with the City of Newark. These contracts, totaling more than six-figures, were received just days after Bhalla made a $5,200 campaign contribution to Empower Newark, a political action committee controlled by Booker’s allies.

Also listed on Empower Newark’s ELEC Reports are Trenk, DiPasquale, Webster, Della Fera, and Sodono. Last year they were reimbursed almost $3,000 for helping host a golf outing for Empower Newark. Makes you wonder if there were any discussions of a hospital sale on the back nine!

Trenk appears to benefit from Booker’s political power

Richard Trenk been cited for using his relationship with Cory Booker to increase business for himself and his relatives in the past. Trenk’s firm holds a $500,000 contract with the Newark Housing Authority. The firm “oversees” redevelopment contracts for the authority.

In 2008, a company owned by Trenk’s relatives was awarded a $10 million contract by the Newark Housing Authority to develop a heliport. Booker claimed the deal was on the up and up, but admitted that even he “was concerned about the appearance of impropriety.”

PolitickerNJ once listed Trenk’s firm as the 19th most powerful law firm in the State of New Jersey. It cited the firm’s ties to Newark Mayor Booker and Jersey City Mayor Jeremiah Healy as a reason for its prominence on the list. Perhaps it’s ties to the Zimmer Administration will help it crack the top ten this year?

After all, City Corporation Counsel Mark Tabakin’s firm, Weiner-Lesniak, tops the list at NUMBER ONE!

HHI to stiff creditors and hurt Hoboken’s credit rating?

8/2/2011 Update:

Oh brother. Below is the Chapter 11 press release from Hudson Healthcare (HHI).

Mayor Dawn Zimmer and Toni Tomarazzo are spinning this as if it’s the “usual course of action,” but it sure as hell isn’t. Why would the HHI file bankruptcy unless it plans to stiff it’s creditors? It is completely feasible that the property taxpayers of Hoboken will be on the hook for the debt anyway!

Food for thought: It’s also interesting that the Zimmer Administration won’t return the surplus because they want to “improve the city’s credit rating,” but filing for bankruptcy is no big deal?? What a downright shame!

Hudson Healthcare files for Chapter 11 Banktrupcy

“Hudson Healthcare, Inc. (HHI), the not-for-profit manager and operator of Hoboken University Medical Center (HUMC) since 2007, filed today for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code to ensure HUMC’s ability to continue operating until completion of the sale of the hospital to HUMC Holdco LLC, an entity sharing common ownership with Bayonne Medical Center. The transfer of ownership is expected to occur in mid-to-late September 2011 upon final approval from the State Health Commissioner for New Jersey.

“It is extremely important that the community, our patients and our employees understand that this move by HHI does not mean the hospital is closing,” says Vincent Riccitelli, HUMC’s acting Chief Executive Officer (CEO) and CEO of HHI. “ HHI’s bankruptcy filing is a constructive step toward completion of the sale of HUMC and the eventual wind-down of HHI. Assuming the transfer occurs as planned, it will benefit all stakeholders, promote public health and safety, maximize value for all creditors and smoothly transition operations to the new ownership group.”

Riccitelli adds that employees and patients need to know that “it will be business as usual at HUMC, with no interruptions in patient services and no impact on hospital employees or medical staff during this transitional period. This is just another procedural step toward consummation of a transaction that will save the hospital and maintain it to serve Hoboken residents for years to come.”

On July 21, the State Health Planning Board held a public hearing in Hoboken to allow city residents to comment regarding the Certificate of Need application submitted to the Department of Health and Senior Services for the transfer of ownership of Hoboken University Medical Center to HUMC Holdco. The session attracted more than 200 residents — with the vast majority expressing support for the transaction.

Approval for a hospital’s “change of ownership” in New Jersey is a comprehensive process requiring the Commissioner of Health and Senior Services to issue a Certificate of Need. The State Health Planning Board must hold a public hearing in the hospital’s service area, consider the Certificate of Need application at an open public session, and then make a recommendation to the Commissioner. That ruling is anticipated later this month.”

Zimmer is wrong that HUMC will close; still refuses public review

Hoboken Mayor Dawn Zimmer has been issuing propaganda grave warnings to the public that we’re all doomed if they don’t execute the sale with the single bidder of Hoboken University Medical Center (to Bayonne Medical Center).

However, Paradigm Physician Partners says they have a viable deal on the table that will ensure HUMC’s viability well beyond “7 years,” and the JNESO Health Care Union says threatening to close the hospital “is not helpful,” and urges CHAPA review (which Hoboken has chosen not to do.)

Hospital Will Not Close – P3’s Offer Still on the Table

In recent public statements Mayor Dawn Zimmer said:

• “If the sale of the HUMC to HUMC Holdco does not go through, the hospital will close.”
• “We will lose our hospital and the vital services it provides our community, and the taxpayers will be obligated for a $52 million bond guarantee. For this reason, the sale to [HUMC Holdco] is crucial to saving our hospital and protecting our taxpayers.”

These statements are inaccurate.

The Paradigm Physician Partners, LLC (P3) offer to buy the Hoboken University Medical Center (HUMC) is still on the table and we are prepared to move that offer to a binding agreement, and complete that agreement, at any time.

The P3 offer and solution for the community is:

• Purchase HUMC for $51.6 million and relieve the taxpayers and the city of Hoboken of its bond obligation.
• Invest an additional $25 million in ongoing operations, new equipment and facility and technology upgrades.
• No Layoffs!
• Operate HUMC as a non-profit community hospital for the long term, not just the next 7 years.
• No service interruptions.
• Acceptance of all major insurance carriers.
• Increase access to primary and secondary care to Hudson County’s un/under insured population.
• Develop strategic partnerships with other Hudson County hospitals to lower cost, improve quality and increase access to all citizens regardless of insurance status.

P3 realizes the critical importance of the HUMC to the community and stands by its proposal to deliver the next generation Accountable Care Organization.

About P3

P3 is a hospital acquisition and management company with a proven patient-centered model. The company works with each partner hospital to create sustainable financial controls with improved standards of patient care, implementing a leadership model and 21st century governing principles informed and guided by the six “Aims of Improvement” described in the Institute of Medicine’s 2001 report; Care that is Safe, Effective, Timely, Patient-centered, Efficient, and Equitable. For more information about P3 and its partners: www.mdparadigm.com

Unions not trying to stop sale – Spin from Zimmer & Tomarazzo

JNESO District Council 1 responds to allegations from Mayor Dawn Zimmer and Hospital Chairperson Toni Tomarazzo regarding the closure of HUMC:

“Recently there have been numerous rumors that the Union(s) have been trying to stop the sale of HUMC. We have made it very clear that our objective is not to stop the deal but rather to have a public review of the deal. We are responsible for phone calls to community members but in no instance have we stated that the hospital will close. So far the only attributable comments about hospital closure have come from Mayor Zimmer and Hospital Authority Chairwoman Toni Tomarazzo.

They have both been quoted in multiple sources saying that “if the deal falls through, the hospital will close.” Threatening to close the hospital is not helpful. We have and continue to have as our only objectives a public review that mimics the required CHAPA review for all other hospital sales, but which is not being done here.

The law that made creation of the hospital authority possible also exempted the municipal hospital from the State’s Attorney General exercising fiscal review and court ordered obligations as a condition of sale.

We are also seeking some enforcement mechanism for the promises the new proposed owner is making in regards to continued access and services in their Certificate of Need application to the State
Department of Health and Senior Services. All of the questions we have raised come from our review of public documents such as the Asset Purchase Agreement (APA), the Certificate of Need (CofN) application, the Department of Health’s questions in relation to that application and the State’s published rating of the proposed new owners current facility and services.

We are responsible for representing our members, many of whom have worked more than 40 years at Hoboken’s only hospital to maintain good paying jobs with decent benefits that allow them to care for
patients and their families. We believe one of the best ways to do that is to help the community preserve access and services to this hospital.”

HUMC Holdco LLC contract approved for $90M; State approval next

4/21/2011:

Last night, HMHA “unanimously approved” a contract with HUMC Holdco LLC to sell Hoboken’s hospital for – you guessed it – $90 million dollars! The exact amount that property was listed with at Grubb and Ellis just last month!

Toni Tomarazzo, Eric Kurta and the rest of the board still haven’t divulged the specific nature of the negotiations, and have offered nothing but “hopes and beliefs” that things are on the up and up. Ironically – this bid comes after higher competitive bids were released from others who initially participated in the RFP process.

Why was there no transparency, limited bidding and ambiguous statements from hospital (so-called) “officials?” No final word on employee retention, patient benefits provided, and a slew of other concerns. The sale is expected to close on July 31st, pending NJ State Department of Health approval. More to come…

3/25/2011 Quick Update:

Lack of transparency continues with HUMC deal

Secret talks are dragging on to sell the Hoboken’s only hospital to the one bidder selected to join the Municipal Hospital Authority in exclusive negotiations three months ago.

The Authority still refuses to release any information about the many bids it received for HUMC. This week, one of the spurned bidders released an updated proposal to purchase the hospital that you can see here. Also, New Jersey Appleseed renewed it’s call for a more open and transparent public process before the hospital is sold by the political appointees on the Hospital Authority board.

See both letters here:

• New letter outlining P3 Partners bid for HUMC
• NJ Appleseed follows up on call for transparency

3/4/2011 Update:

HUMC Debacle unravels more each day in Hoboken

UPDATE: People For Open Government joins NJ Appleseed calling for more transparency regarding the HUMC sale, Tomarazzo provides misleading information to reporter

“Sunshine is said to be the best of disinfectants.”

– Supreme Court Justice Louis Brandeis

Every day there are new developments in the growing controversy surrounding the future of Hoboken University Medical Center.

Today there are more calls to open the opaque, single-bidder negotiations to sell HUMC. Eight bidders put in proposals for Hoboken’s only hospital. Only one was given a two-month “exclusive” negotiation period by the Hoboken Municipal Hospital Authority Board, which is fighting to keep all details of all bids secret until well after a deal is done.

Tomarrazzo: We’re doing this on our own terms, period.

The HMHA board is resisting calls for additional public input and scrutiny into the deal they are doing with the owners of Bayonne Medical Center, a for-profit hospital management team which secretly – as Hoboken411 reported first – cashed out it’s real estate interests for $58 million, and listed the HUMC property with Grubb and Ellis for $90 million even before they got a deal done with the Hospital Authority.

Hoboken People For Open Government is joining the New Jersey Appleseed Public Interest Law Center in calling for proper public hearings into the deal before the Hospital Authority signs a final agreement with the Bayonne group.

“Dear Mayor Zimmer and Council President Mason:

We are writing to express our concern over the lack of transparency in the process created by the Hoboken Hospital Authority to evaluate bids and to make decisions about the sale of Hoboken University Medical Center (HUMC). We understand that public hearings will be held at a later stage, after the key decisions have been made, when effectively the only choices will be to accept the proposal with minor modifications or to begin from the beginning.

We agree with NJ Appleseed that this city would benefit greatly if the issues that would arise in a CHAPA review concerning the protection of “community assets” were considered by the Hoboken City Council.

The hospital and the ground on which it sits are public assets. The choice of what happens there is of great importance to the City not only in financial terms but also as it will affect the quality of life here. The ripple effect of whatever happens in those buildings and on that land will have major consequences for the people of Hoboken.

Sincerely,
Alice Crozier, President
People for Open Government

That letter on behalf of the POG Board places one Hospital Authority board member in a particular pickle. Ex-POG President – and former Hoboken411 contributor – Eric Kurta has been silent on open government and transparency issues since Dawn Zimmer became Mayor. In full disclosure, Kurta contributed $1000 to Zimmer’s campaign, and was appointed by Zimmer’s allies to serve on the Hospital board. He has since launched a campaign for City Council and, much like the Mayor herself, has his political future riding on selling HUMC quickly and quietly.

Where does Kurta stand? POG or his political ambitions?

Once an outspoken critic of Hoboken government hypocrisy, Eric Kurta turned a blind eye to Zimmer’s violations of public trust and is now her chosen candidate to run for the First Ward City Council Seat. Kurta’s campaign distributed a photo of him standing side by side with Hoboken Pay-to-Play king Ravi Bhalla at the grand opening of his campaign headquarters. Bhalla’s tendency to circumvent Pay-to-Play laws to make contributions to politicians who award his law firm six-figure, no-bid contracts is now legendary thanks to reports in the Star Ledger and Hoboken411.

Will Kurta support calls for added transparency by POG and NJ Appleseed, among others? Hoboken411 will let you know if Mr. Kurta chooses to offer a response, or hide behind the comments of HMHA Chairwoman Toni Tomarazzo, which is something Zimmer has been doing for weeks.

Tomarazzo spins Metsch, HUMC bonding facts, and more

Toni Tomarazzo is an attorney who became personal friends with Peter Cammarano and his wife when they met in law school.

She later served on the steering committee of the Zimmer campaign front group known as “Hoboken Revolt” with fellow future Hospital Authority board member Jonathan Metsch. He’s perhaps more famously known as the man who made $800,000 a year hiding a $3 million a month deficit at Jersey City Medical Center.

Despite his record as a Hospital Administrator, Zimmer took thousands of dollars in campaign contributions from Metsch and made him her Mayoral designee on the Hospital Board. Like Mayor Dave Roberts before her, Zimmer is an “ex-officio” member of the HMHA board. That means she very rarely attends meetings, and allows her designee – Metsch – to vote in her absence. Even when she HAS attended meetings Dawn sat in the audience and allowed Metsch to vote! She never takes a seat with the rest of the board. Hoboken411 has been to HMHA meetings to personally see this take place.

Toni tells tall tale about puppetmaster Metsch

The daily Jersey City paper continues to take concerns about this deal so seriously that their Deputy Managing Editor is on the story.

“An apparent conflict of interest that the New Jersey Appleseed letter alluded to is that Jonathan Metsch, former president of the Jersey City Medical Center who earned $800,000 a year while the JCMC was losing $3 million a month, is on the HMHA board. Tomarazzo said that Metsch does not have a vote on the board and that the vote for HUMC Holdco’s proposal was a unanimous 9-0… When Zimmer is unavailable, Metsch places her vote, Tomarazzo said.”

– Ron Zeitlinger, JJ

Oh, but Metsch most certainly does have a vote on the board. Minutes of the HMHA meetings going back to his appointment as the Mayor’s designee will find dozens, if not hundreds of votes taken by Metsch, even when Zimmer was present in the room!

Critics in the audience pointed out how Zimmer refused to take her seat with the board in deference to Metsch, who would have had to step away from his position if she did. Metsch took votes while Zimmer waited in the audience to give a prepared speech.

Tomarazzo misleads on Hospital bond options

The BMC team’s secret move to list HUMC in a $90 million real estate offering with Grubb & Ellis (first reported by Hoboken411) was also addressed by Tomarazzo.

“For those who speculated that Hoboken should sell the land and property itself, Tomarazzo said it is not possible. Tomarazzo said that the multiple bonds that were issued in 2008 to cover the $52 million debt had to be paid off before the city could sell the hospital, and the terms of the tax-exempt bonds are that they can’t be pre-paid.

– JJ

Ms. Tomarazzo is either deliberately misleading Zeitlinger, or simply doesn’t understand how the HUMC bonds work. Tomarazzo – a lawyer trained in the art of deflection – chooses to say the bonds “can’t be pre-paid.” However, they can be defeased, and would likely have to be as part of any sale of HUMC. In order to defease the $52 million in HUMC bonds guaranteed by city taxpayers, Hoboken would have to deposit Treasury securities in an amount sufficient to cover principal and interest until maturity (perhaps as much as $60 million) and the covenants in the bond documents would fall away. This is how any sale of HUMC would have to be done, according to an expert who has examined the bond documents for Hoboken411.

Did Tomarazzo understand this finance concept and choose to send the paper down a different road, or does the Chairwoman of the Hoboken Municipal Hospital Authority not understand the intricacies of the very bond guarantee that is the crux of the issue?

If the BMC group known as “Holdco” makes a $60 million deal to defease the Hoboken Bond Guarantee, but flips the hospital with Grubb & Ellis for $90 million, where does that $30 million profit go? Who gets the commissions? Who gets the high six-figure salaries to run the hospital for the mere 7 years Holdco will guarantee they will keep it open before being released to consider other options for an entire block of R-2 Residential-zoned land in the heart of Hoboken (as the Holdco/Grubb & Ellis listing so clearly pointed out!)

No answers to those questions from Tomarazzo, who also didn’t go on the record regarding calls for public hearings and the release of documents before a final vote on the sale. These are just a few of the reasons why NJ Appleseed and Hoboken POG believe this closed-door deal needs more public scrutiny and sunshine before it’s final. What do you think? Leave your comments below.

3/3/2011 Update:

NJ Appleseed calls for full hearing on the sale of HUMC

“Open the hospital blackout curtains and let the sunshine in.”

That’s the message from a highly respected non-profit legal advocacy group to Mayor Dawn Zimmer about the secrecy surrounding the sale of Hoboken University Medical Center.

The New Jersey Appleseed Public Interest Law Center is urging the Mayor to support a full public hearing prior to the City Council adopting an ordinance to dissolve the Hoboken Municipal Hospital Authority, which would finalize a sale of the former St. Mary Hospital. Appleseed has actively represented the interests of the public in several sales and mergers of non-profit hospitals through its statewide Protection of Healthcare Assets and Services Project.

Appleseed: HUMC sale needs greater public scrutiny

Citing New Jersey law throughout, the Executive Director Renee Steinhagen’s letter notes the sale of the hospital will only go through limited scrutiny leaving the public to wonder who is really making out on the exclusive, secret negotiations with only one of 8 bidders:

“We believe the citizens and taxpayers of Hoboken must be assured that the (Hospital) authority exercised due diligence in deciding to effectuate the acquisition, and negotiating the terms and conditions of the acquisition, required each conflict of interest to be disclosed, established appropriate criteria… and is receiving full and fair market value for it’s assets.”

– Renee Steinhagen, NJ Appleseed

Who makes out on this deal? Who gets jobs, and cash?

Steinhagen’s letter notes three key “rumors in the community” have only grown as Zimmer and her allies on the Hospital Authority clamp down on information about the secret negotiations. HMHA Chair Toni Tomarazzo won’t even identify who made a bid for HUMC, let alone why those bids were rejected in favor of the offer made by the embattled management of Bayonne Medical Center. Among the rumors noted in the letter:

• Certain members of the authority will be receiving ownership interests in, or positions with the new owner;
• That the new owner will be flipping the hospital to a real estate entity for $90 million making and immediate profit; and
• That other respondents to the Request for Proposal were NOT permitted access to confidential information and thus were not invited to make a detailed, competitive bid for the hospital.

Steinhagen notes all such rumors would be put to rest if the HUMC transaction were subject to the same scrutiny that a sale undertaken by a private, nonprofit board would endure. As a public authority created especially for Hoboken by people who used to be the most powerful politicians in the state, the HMHA will face no such mandatory Attorney General scrutiny. NJ Appleseed wants the City Council to hold a public hearing to determine that “appropriate steps have been taken to safeguard the hospital and that any proceeds from the proposed acquisition are irrevocably dedicated for appropriate charitable health care purposes” as noted in NJSA 26:2H-7.11(b) of state law.

Who makes out here? What are the insiders hiding?

The hospital board is made up of several people who either work in health care today or have in the past. The concern is any one of them could be looking for a payday with HUMC Holdco. First, there’s the current management team including CEO Spiros Hatiris who would have a vested interest in voting for a new owner that would keep him and his people on board. A hospital group looking to bring in it’s own management may not be so welcome.

Then, there’s the puppetmaster behind Dawn Zimmer’s hospital policy, Jonathan Metsch. He’s the former President of Jersey City Medical Center who made $800,000 a year while the hospital was running $3 million a month in the red. When he was forced to reveal an audit to his Board of Directors showing the true health of his hospital, he was out of a job. Now he’s looking for a second act as the Mayor’s designee on the HMHA board, and sources say the last thing he wants is his old JCMC bosses buying HUMC.

3/2/2011 Update:

Tomarazzo contradicts herself on Hospital bidder financing

… Places credibility as Hospital Authority Chair in question

Hoboken Municipal Hospital Authority Chairwoman Toni Tomarazzo is at the center of a firestorm regarding the non-transparent, single-bidder secret negotiations to sell Hoboken University Medical Center (HUMC).

On Tuesday, Hoboken411 broke the news of the secret, $90 million real estate listing of HUMC’s property. That Grubb & Ellis listing is believed to have come from HUMC bidder Holdco, run by principals of Bayonne Medical Center who refuse to comment on it.

Seven bidders were placed on ice when the HMHA board decided they would negotiate exclusively with Holdco two months ago. With Mayor Dawn Zimmer’s full support, Tomarazzo has refused to even release the names of the other bidders, let alone allow the public (or even the City Council) to review and rank the eight offers for themselves in a transparent process.

Does Bayonne group have money for the deal, or not?

The description of the unnamed “Guarantor” on the real estate listing fits that of BMC, the same group that tried to hide it’s deal to sell the land and building under the Bayonne hospital for $58 million before Hoboken411 deciphered a cryptic disclosure from the buyer and broke the news.

Now Tomarazzo’s own words are coming back to haunt her, spreading more doubt BMC has what it takes to get the deal done. When Holdco was awarded the letter of intent there was a lot of off-the-record grumbling from people close to other bidders that the embattled, single-hospital management firm didn’t have the juice – or the money. In response, reporter Ray Smith got Tomarazzo on the record back in early January:

“Tomarazzo said she believes the potential buyers have the capital “immediately available to satisfy the requirement of alleviating the $52 million bond when the deal is completed.” The hospital cannot be sold until the $52 million bond has been legally extinguished, which is why Tomarazzo emphasized the point that immediate capital was available.”

– HR, 1/9/2011

Tomarazzo made clear her belief the buyers had immediate access to the money was key to the board’s decision to go with the group.

Now, through a series of Hoboken411 reports exposing the BMC team’s secretive financial dealings, we know they don’t have the money, and were seeking to monetize an asset currently owned and guaranteed by Hoboken taxpayers to get it. Essentially, using a public asset (HUMC and it’s land in an R2 Residential Zone) to quietly raise $90 million to buy it for themselves. In response to this revelation, reporters sent Tomarazzo spinning yesterday. She responded to Hoboken411’s report by saying the ad for a sale leaseback appears to be a “finance mechanism,”

“It appears to be their due diligence with respect to them examining financing,” Tomarazzo said on Tuesday. “It’s something we are reviewing as we go onward and upward [in the negotiations].”

– HR, 3/1/2011

This means the Bayonne group in fact did not have the cash and/or the financing in hand back in January to purchase HUMC when Tomarazzo said Holdco “had the capital immediately available” to do the deal. Remember, she actually “emphasized the point that immediate capital was available.”

Today we know that isn’t true. Through it’s secret listing of HUMC’s real estate Holdco is showing they actually need to the asset they want to buy to release the city from it’s bond guarantee. That is not having capital immediately available. Either they have the money, or they don’t. Did other bidders show proof they had the cash on hand to do the deal? We don’t know, because Zimmer and Tomarazzo won’t release any details. In essence they just keep saying, “Trust us, we’re smarter than you!”

More red flags; Zimmer pulls classic stunt of avoidance

Over at the Jersey City daily, the HUMC/BMC story is raising so many red flags it’s now being handled personally by the Deputy Managing Editor.

They’ve seen the controversy surrounding BMC in Bayonne and have learned to be more than a little suspect of when politicians look to sell major assets in secret deals.

Yesterday, when the JJ Editor called Mayor Dawn Zimmer for comment, he was given the runaround by $75,000-a-year political operative Juan Melli.

“Hoboken Mayor Dawn Zimmer is in meetings all day and referred all questions to Tomarazzo, city spokesman Juan Melli said.

– JJ 3/1/11

That’s the second oldest line in the book, right between to, “The dog ate my homework,” and “The check is in the mail!”

It’s not the first time Zimmer has hidden from the press. Don’t forget how the Mayor also hid from a Channel 2 reporter who came to Hoboken to follow up on Hoboken411’s accurate exclusive about her secret plan to relocate Municipal Garage operations to a residential neighborhood.

Previous updates continue below…

3/1/2011 Update:

Hoboken411 Exclusive:

HUMC quietly marketed for $90 million sale leaseback

…even before Hospital Authority closes deal to sell!

The secrecy surrounding controversial exclusive negotiations with a selected bidder for Hoboken University Medical Center is taking another bizarre turn.

Hoboken411 has learned international Real Estate consulting firm Grubb & Ellis is marketing HUMC’s land and buildings to investors in a deal that could rain millions in fees and commissions.

The marketing documents show full color aerial photos stressing HUMC’s proximity to Manhattan and location in an R-2 Residential Zoning District, mouth-watering information to any buyer interested in a backup plan for condos should HUMC fail.

Embattled Bayonne Medical team: Behind HUMC listing?

The listing is reminiscent of the cryptic announcement Hoboken411 decoded to break the news the owners of Bayonne Medical Center (BMC) had secretly sold their land and building to a Real Estate Investment Trust.

HUMC is never mentioned by name in the $90,000,000.00 Grubb and Ellis listing, and neither is the exclusive bidder organized by BMC called “HUMC Holdco.”

Instead, the Grubb & Ellis materials note the hospital in question is “the oldest in New Jersey”, and that “The Guarantor Hospital is owned by a private group that purchased the hospital in early 2008.” That would describe the BMC team that quietly raised $58 million in a sale-leaseback of its Bayonne property this month, possibly to raise cash to buy HUMC.

Latest news after 2 months of non-transparent negotiations

Seven other interested bidders were told the Hoboken Municipal Hospital Authority Board they would not be part of two months of exclusive negotiations with the bidders from Bayonne. As Hoboken411 has reported, those other bidders are chafing at the backroom dealings of the Dawn Zimmer-aligned majority on the HMHA board, and are beginning to push back. One of them – Paradigm Physician Partners – went public last week. You can read their press release after the jump.

Now Liberty Health – the owners of Jersey City Medical Center (JCMC) – are also making moves. Many people believed JCMC was likely to make the most competitive bid for HUMC, and had the best opportunity to build competitive and profitable synergy with the smaller Hoboken Hospital.

Jersey City Medical center bites back

A local paper quotes a JCMC spokesperson as saying decisions by the Bayonne Medical Center management to go to war with major health insurance providers – leaving patients and doctors in the crossfire – has been good for their business. Mark Rabson said 75 physicians moved from the Bayonne Hospital to the Jersey City Hospital in part because BMC doesn’t take Horizon Blue Cross/Blue Shield insurance – the largest provider in the state, which covers Hoboken City and School District employees.

Comments from HMHA Chair Toni Tomarazzo strike nerves

The paper followed up on Hoboken411’s reporting with a front page story.

Hospital Authority chairperson Toni Tomarazzo was quoted as saying she didn’t want more disclosure and participation because – and we quote – “You could start having potential bidders bidding against each other.”

That prompted one hospital watchdog to respond, “Yeah, we wouldn’t want competitive bidding involved in the sale of a public asset! Close that door and go away Hoboken public, there’s nothing for you to see here!”

P3 offers $77 Million for HUMC

Competing bidder goes public with offer as controversy grows regarding non-transparent bid process

With only a few days left before a deadline to make a deal with it’s only selected bidder, the Hoboken Municipal Hospital Authority is now facing something it didn’t want: a public discussion of the bidder’s proposals. Several bidders offered proposals but only one – a group led by principals of Bayonne Medical Center – was offered exclusive negotiating rights by the Hospital board. Now one of the scorned bidders (Paradigm Physician Partners, LLC) is going public in a press release.

“P3’s President and Founder, Geoff Teed, believes in Governor Christie’s desire to stop the “status quo”, which is represented by the current plan being embraced by HMHA. Smaller government should mean doing more at the community level to preserve neighborhoods and community, and P3’s plan for HUMC is driven by an unwavering commitment to that idea. P3 wants to serve the community at large to make HUMC better than they find it or how it has ever been – upturning the status quo as represented by the alternative offer for HUMC, which pursues profit at the expense of main street. “Healthcare access is a moral obligation, a human right, and not a privilege determined by the size of your wallet. P3’s vision for HUMC will unite this community, not divide it, just for the sake of making a profit. By bending the operational cost curve, we will reverse the dangerous trend of gimmick hospital financing, and preserve your community’s core economic asset”, said Teed.”

P3 wants more public discussion; not backroom deals

Hoboken411 has learned P3 is just one of the bidders looking for a more public discussion than Mayor Dawn Zimmer’s appointees on the board would allow.

“Unlike the pure profit-driven bid currently under review by HMHA, we see no reason forsake HUMC’s 501(c)3 not-for-profit status. There will be no service interruptions and we will accept all major insurance carriers. There can’t be two classes of citizens: those who enjoy rich healthcare service and those who have none. We need to end this dual system, and we have the best solution and management team who can ensure access to high quality care for all, while producing impressive operational returns.”

There is talk that a competing bid from the operators of Jersey City Medical Center was rejected simply because former JCMC boss Jonathan Metsch – placed on the board by Zimmer – has an axe to grind. Metsch was shown the door when it was revealed how many millions his hospital was running in the red. P3′s release today may lead to other bidders going public with their bids.

This also follows Hoboken411′s exclusive story last week that Bayonne Medical Center was hiding the fact that they had sold their property to a Real Estate Investment trust.

BMC is only just today responding to many press inquiries from newspaper reporters who have followed up on Hoboken411′s 100% accurate exclusive.

Full Press Release Here.

Bayonne Medical Center Sold?

Cryptic news release from REIT could have impact on sale of Hoboken hospital

The non-transparent negotiations to sell Hoboken University Medical Center to a group affiliated with Bayonne Medical Center may be affected by the possible sale of that hospital to a Real Estate Investment Trust.

That’s a “possible” sale, because BMC hasn’t made any official announcement. However, a somewhat cryptic press release from Medical Properties Trust is leading people to believe the REIT has purchased BMC. The announcement issued on Tuesday is entitled Medical Properties Trust “Invests $88 million in New Jersey and Texas hospitals”:

“Medical Properties Trust, Inc. (NYSE: MPW) today announced it has acquired the real estate of an acute care hospital in New Jersey and the real estate and, indirectly 9.9% of the operations, of a long term acute care hospital (LTACH) in the Dallas area.

The Company purchased for approximately $58.0 million the real estate of a 6-story, 278-bed acute care hospital in the New Jersey area of metropolitan New York, and leased the facility to the operator under a 15-year lease, with six 5-year extension options. The operator is an affiliate of a private hospital operating company that acquired the hospital in 2008.”

The press release goes on, but never mentions the name of the New Jersey hospital real estate they are buying, and there has been no report of the Bayonne hospital being sold. A little digging by Hoboken411 shows the Medical Properties Trust description of it’s acquisition fits BMC, which:

• is 6 stories tall
• is a 278-bed acute care hospital
• is in the metro New York area
• is operated by an affiliate of a private hospital operating company that acquired the hospital in 2008

All those describe Bayonne Medical Center, whose affiliates were given exclusive rights to negotiate a sale of Hoboken University Medical Center despite what many people believe were better offers from more established players in the regional health care business. BMC’s management team has had a controversial run in Bayonne, including a war with one of the largest health insurance companies in the state.

Who is Medical Properties Trust?

MPT describes itself as “Focusing exclusively on providing capital to acute care facilities of all kinds through long-term triple-net leases. And, unlike other sources of capital, MPT provides 100 percent financing to reduce an organization’s overall cost of capital by unlocking the value of its real estate assets.”

That means they leverage the tax advantages of being set up as a Real Estate Investment Trust to provide huge mortgages on the land that hospitals sit on to invest in the operations of the hospitals. They don’t run hospitals. They buy the land and buildings to provide cash to keep hospitals running as an investment. If the investment doesn’t pay off, the hospital may not be around very long.

What does it all mean?

Too soon to tell, but it is curious how BMC is apparently hiding this big news about it’s financial situation.

1/5/2011 Update:

Bayonne Medical Center may buy HUMC

The board of the Hoboken Municipal Hospital Authority announced it will enter exclusive negotiations with the owner of Bayonne Medical Center (BMC) to sell the former St. Mary Hospital.

The Zimmer-controlled HMHA board has been entertaining bids from “several” groups interested in operating HUMC, but instead of entering negotiations with the top bidders, it has chosen to negotiate with only one.

HUMC Holdco, LLC is the name of the paper company created for the negotiations by the BMC owners.

“HUMC Holdco LLC has pledged to keep the Hospital open as a full-service, acute-care, community hospital for at least seven years. The parties plan to complete due diligence and conduct negotiations leading to the execution of a binding asset purchase agreement by the end of the first quarter of 2011.”

– HMHA Press Release

The press release focuses more on quotes and platitudes than concrete details about the BMC bid. There is no mention of what – if any – money would change hands to make the deal work. The Zimmer campaign contributors who were appointed to the board indicate they are working to remove the $52 million city taxpayer bond guarantee, but some are concerned they may give away millions more in assets just to say they “got a deal done.”

Horizon Blue Cross Blue Shield losers at HUMC?

Bayonne Medical Center has been the subject of many controversies since current management took over a few years ago. Union troubles have been joined by difficulties with Health Insurance providers, which may explain this line in the press release:

“HUMC Holdco LLC has indicated its intention to pursue and secure fair and reasonable contracts with most, if not all, third-party payors following the receipt of all regulatory approvals and prior to closing. And, at this stage of the process, HUMC Holdco LLC would be pleased to enter into negotiations with any insurance provider that currently has a contract with the Hospital.”

– HMHA Press Release

Horizon Blue Cross Blue Shield is the state’s largest health insurer. Last month it wrote it’s members asking them not to use Bayonne Medical Center, alleging the hospital charges exorbitantly high fees for emergency room and inpatient services. Horizon claims since BMC pulled out of their network in February 2009 that the hospital more than doubled its inpatient services charges.

But what about the other bidders?

Sorry, no details available.

The Zimmer appointees on the HMHA board are tight-lipped about the other bids, and why they’ve decided to negotiate with just one company. Some say this is a bad move because they lose leverage, and will be under tremendous political pressure from Zimmer to make a deal – any deal – to get the city off the hook for the bond guarantee.

“With a Letter of Intent executed, the process will move on to the negotiation of an agreement after a due diligence phase. While the Authority has sole authority to reach an agreement to transfer ownership of the Hospital, any such decision is subject to review by the New Jersey State Department of Health and Senior Services, through the Certificate of Need process, which will also include a public comment process.”

– HMHA Press Release

Bidders have political ties to Christie supporters

Bayonne Medical Center’s owners contributed to a controversial political non-profit group called “Reform Jersey Now” which was built to support Governor Chris Christie’s agenda. This group was organized via Internal Revenue Service rules as opposed New Jersey’s more stringent campaign finance laws. At first RJN refused to release the contributors who raised nearly $624,000 last year, but gave up the names when few people were watching just after Christmas.

Reform Jersey Now is suspected by Democrats of being an attempt to circumvent New Jersey’s Pay-to-Play laws, and has so far refused to indicate where it spent all the money.

Where is this going? Why no transparency?

In a perfect world the signing of this letter of intent leads to the release of the city’s bond obligations without giving away the store in a mad rush to dump the operation.

There’s been little transparency into the decision making underway here, and that’s likely to continue right up until the Hospital Authority announces it completed negotiations to sell.

Hold on for a bumpy ride Hoboken!

HISTORICAL UPDATES CONTINUE BELOW…

Big changes on the HMHA board

The room was packed for last night’s Hoboken Municipal Hospital Authority Board meeting after leaks from Mayor Dawn Zimmer’s office set off a panic at HUMC. In an attempt to encourage the press to cover her photo-op appearance at the meeting, someone left a reporter with the impression that Zimmer would announce the sale of the hospital. It turns out that wasn’t true, but the meeting still had its moments.

Kramer gives up Chairmanship in face of a hostile majority

With the recent appointment of four new members of the HMHA board, Zimmer now controls a majority of the votes. Chairman Kevin Kramer stepped down from the leadership role, but will remain on the board. He cited the upcoming birth of his first child as the reason for his decision. REVOLT steering committee member Toni Tomarazzo was nominated to take Kramer’s place. A second nomination for former 5th ward Councilman E. Norman Wilson was also made. Tomarazzo had the votes, and Wilson was elected to the largely ceremonial (and at the time, vacant) role of Vice Chair.

1st order of new business: Mo’ money for mo’ lawyers

Tomarazzo immediately threw a live item on the table that was not on the original agenda. She drafted a resolution to hire more attorneys to conduct a legal analysis of the hospital’s financial status.

This would be on top of the existing law firms representing the board, and a $200,000 state-mandated “comprehensive assessment” of the operations of HUMC, JCMC and Christ Hospital due to wrap up within 60 days. Tomarazzo moved to waive the “competitive negotiation provisions” and instead bring two firms to the board for consideration next month.

Questions about the cost of new attorneys went unanswered, though it was eventually learned it would likely be more than $150,000.

Employees who gave 10% salary cuts express concern

Several employees said money for yet another law firm would come out of the 10% salary give-backs they agreed to to keep the hospital open. Hospital CEO Spiros Hatiris also said he saw no reason to spend the money on lawyers. Hatiris also said Zimmer is “Wrong, dead wrong” about the hospital’s financial state, and that he plans to “break even before depreciation” this calendar year. Hatiris agreed the goal should be for HUMC to someday “transition into private hands,” while Kramer characterized hiring attorneys now as “overkill and premature.”

Attorney measure passes in a contentious 5-4 vote

Despite criticism of the resolution, it passed along the new “party lines” of those appointed post-Zimmer and pre-Zimmer. The meeting was recorded by WeThePeopleReports.com, which should have it available on their website in a few days.

1/29/2010 Update:

Mason calls for transparency – for over 2 years now

Hoboken Councilwoman Beth Mason is calling on Mayor Dawn Zimmer (who was “Absent” from this weeks meeting) and the Executive Board of Hoboken University Medical Center to release all financial documents as well as their plan to keep the hospital viable in a video news release:

1/27/2010 update:

HUMC firm that there’s no worries

• CEO Spiro Hatiras insisted that HUMC absolutely will not close by any means.
• That the “10% salary give-backs across the board” will result in $11.5 million in savings,
• Coupled with the expected $7m from the state ($1m applied to 2009, and $6m for 2010) would,
• Result in a “surplus” of over $3m+ that would be used for capital improvements (elevators, etc.) – and not re-instating the employee salaries.

Your Mayor and HMHA board member Dawn Zimmer didn’t show up for this very important meeting.

First 15 minutes of the meeting tonight, where CEO Spiro Hatiras says “unequivocally were are not closing.”

1/22/2010 Update:

HUMC Responds: “We are not closing”

Hoboken Municipal Hospital Authority Chairman Kevin Kramer sent Hoboken411 his reaction to the Christie Transition Team report that says “Hoboken University Medical Center will close in the next few months.”

“I am outraged by the untrue statement that is included in a report released today by the Governor’s office. Today, Governor Christie released 19 reports prepared by his Transition New Jersey subcommittees. The Subcommittee on Health’s 18-page report includes exactly one sentence regarding Hoboken University Medical Center, yet this one sentence is extremely harmful and flat out false.

HUMC is not closing.

No one from HUMC or the Hoboken Municipal Hospital Authority was ever contacted by anyone on the subcommittee. The report includes no data to substantiate the statement about HUMC, and I understand that some members of the subcommittee may have never seen any hospital financials or the final report before it was released. Notably, the report is dated January 5, which was before certain employee concession packages were ratified, and further, a financial recovery plan is in place that has already realized significant cost savings for HUMC.

The Governor’s office should take down this report from its website immediately.”

See original story below. The report from the Governor’s team also stated:

“We believe that Health Care Stabilization funding is critical for the viability of some of NJ’s most essential hospital and the patients they serve. However, it’s intent to “stabilize” a hospital and prevent access to care problem until the hospital can better position itself financially; its intent is not and should not be to temporarily float a failing hospital while a sustainable business model that would close as soon as funding ended.”

Mayor Dawn Zimmer endorsed the HMHA’s application for NJ Stabilization funding as a means to hold off financial disaster, something the Christie team is against. The question up for debate now is if recent budget cuts and employee concessions at HUMC will – as hospital officials claim – put Hoboken’s taxpayer-owned hospital back on track. As always, Hoboken’s most read comments section is open for your thoughts.

1/22/2010 Update:

HUMC to Close in Months???

A new report from new Governor Chris Christie’s office paints a bleak picture for Hoboken University Medical Center. The Republican’s transition team formed a sub-committee on Health, which is out with its recommendations. This is on Page 5:

“On December 22, 2009, the Corzine Administration announced $40 million in Health Care Stabilization awards to 9 hospitals. While many of the hospitals receiving aid met the above criteria, at least one hospital, Hoboken University Medical Center, will close in the next few months even given this grant funding. We view this as a misuse of limited state resources for health care stabilization.”

The committee report goes on to suggest that the new Governor should consider REDUCING the grant awards, and take back money that Corzine promised to the hospitals just last month. The Hoboken Municipal Hospital Authority board and HUMC officials said the grant money was critical to the hospital, which ended up running a “surprise” $22 million dollar deficit last year. Though HUMC was not on track to close (at least not publicly) within “the next few months,” a reduction in state aid could hasten its demise. That would have the effect of blowing a massive hole in the City of Hoboken’s financial picture, as well as put dozens out of work.

Will the hospital close?

The idea that advisors to the Governor believe the hospital will close “in the next few months” is scaring a lot of people today. Hospital officials are denying they will close. HUMC workers just accepted a 10% pay cut to keep the hospital open. Does the state know something Hoboken officials don’t know?

Remember Hoboken411 has been covering this story in depth from the beginning and was the only source for in depth coverage of the “Cons” of taking over the hospital while other older media was buying the line about a Harvey Holzberg-led “Miracle Recovery” hook, line and sinker.

Some say this is great news, while others think it’s just delaying the inevitable…

HUMC gets a lease on life

The Chairman of the Hoboken Municipal Hospital Authority reached out to Hoboken411 yesterday and said:

“The NJ Department of Health and Senior Services (DHSS) announced this afternoon that HUMC will receive $7,000,000 in stabilization fund grant money.

This grant award represents a substantial portion of the amount originally requested and further represents a big victory for HUMC and the Hoboken community. As of this moment, we do not know exactly when the funds will be released or in what increments. Further, please know that there will be conditions HUMC will have to agree upon in order to receive these funds. My early understanding of the conditions is that they would not in any way be so onerous that HUMC would consider not accepting the grant award. For example, one condition is that there must be a state representative placed on the board of each grant award winner. We already meet this criterion.

You can find a copy of the DHSS announcement here.”

Some questions linger… such as:

• How long will this help the hospital? Enough time to stop the bleeding?
• Or will we see a re-run of the crisis again in a year?

12/16/2009 Update:

Hospital Meeting also tonight at 7pm

How convenient! The Hoboken University Medical Center board meeting is tonight – the same time the City Council meeting takes place, and even the Hoboken Holiday Concert put on by the kids!

If history serves as any reference, many governmental processes are pushed through when families are busy living their lives (watch out for the Obama health care catastrophe as well this Xmas!)

Here’s the Agenda for your review (if you bother going!)

CONTINUE THE HOBOKEN411 COVERAGE FROM 2009 BELOW…

11/24/2009 Update:

Hospital Board Meeting Tonight – 7pm

Should be another depressing presentation & meeting for the Hoboken taxpayers. The public is invited to attend the Hospital Authority’s monthly meetings at Assumption Hall in the Hoboken University Medical Center Main Building, 308 Willow Avenue.

Keep in mind there will be angry residents attending, but the real news is whether we get the $10+ million dollar grant (as CEO Spiros Hatiras mentioned in last week’s City Council Meeting) – and that won’t be known until December. So you might want to ration your angry juice a little longer…

A Hoboken411 reader provides his own analysis of what concerns him (and this doesn’t even include the potential problems with the unions, either!):

Hospital huge concern for Hoboken Taxpayers

“The amount the city owes on the bonds is now $65 million, up from $52 million when issued (now includes interest on the bonds.) What this means is that the longer the Hospital problem goes unresolved, the greater the amount Hoboken taxpayers will be on the hook for.

CEO Hatiras says he is looking under every rock for savings but then he tells his employees there will be no benefit losses or job losses. You have to question his competency when personnel costs are most likely the hospital’s largest single category of expense, and the only realistic way of achieving meaningful savings.

If the hospital defaults, the city has said it would sell the land to re-pay the bonds. However, the land is probably only worth $25 million, based on a comparison with the recent municipal garage sale, also for about $25 million. (At the time the city took over the hospital, George Crimmins estimated the land could bring $50 million, but that is hopelessly unrealistic). Both are one city block in size. That leaves a shortfall of $40 million.

Two other factors to consider. There may be some unspent bond money that could be applied to reduce the $65 million owed on the bonds, and there may be severance payments to employees that could increase the amount of money the city has to come up with. Without any more detail on these two items I would assume they offset one another. That leaves the city with a $40 million unfunded obligation. If you add that to the estimated budget for this year of $90 million, it means the city must raise $130 million, larger than the amount raised last year.

The takeaway here is the sooner the citizenry forces elected officials to confront this problem the less it will ultimately cost the taxpayers.

10/29/2009 Update:

CFO RESIGNS! Metsch joins board!

The board of the Hoboken Municipal Hospital Authority met last night for the first time since the bombshell news that HUMC lost $22 million last year.

The news is so grim yet another member of the so-called “Miracle Turnaround Team” has resigned. Hospital Chief Financial Officer Ron DeVito has “resigned as CFO as of May 1, 2010” following the bad news. New HUMC CEO Spiros Hatiras made the announcement, adding he relieved DeVito of his duties immediately. Hatiras and DeVito were part of the Hudson Healthcare team brought in by former CEO Harvey Holzberg. Hudson Healthcare small management team was paid $16 million last year to administer the hospital.

Hatiras forecasts more losses, break-even after 2010

Hatiris says the losses for this year will likely be around $8 million before depreciation, and he hopes to break even the following year. It is a far cry from the “Turnaround Miracle” Holzberg was selling. The audit report blames poor financial practices by the Holzberg/DeVito team for accounting overstatements that made HUMC’s losses appear smaller than they actually were. Hatiris says his staff is currently working on a new strategic plan for the hospital. Hatiris admitted Holzberg’s claim that HUMC was “recession proof” was wrong, and that the economic downturn also had an effect on the cash flow. Councilwoman Beth Mason attended the meeting to get more information about the Hospital’s status. Acting Mayor Dawn Zimmer, who actually has a seat on the Hospital Board as Mayor – did not attend.

Wait, what’s Jonathan Metsch doing on the board?

People who showed up for the meeting were surprised to see Jonathan Metsch sitting at the board table. They learned Acting Mayor Dawn Zimmer put him there as her designee without informing the council and public. That’s in contrast to her appointment of Tejal Desai, which was publicly discussed and voted on at the last council meeting. Metsch has been a very vocal supporter of Zimmer, but ironically left his job as president of Jersey City Medical Center with much the same cloud around him as the one now haunting Ron DeVito. This is how the weekly paper noted his history just two months ago when Zimmer appointed Metsch the head of her Swine Flu Task Force:

“Metsch was criticized during his tenure at JCMC for making more than $800,000 while the hospital languished in debt. He left JCMC amid budget turmoil after he was forced to produce an audit to parent company Liberty Health that showed a monthly loss of $3 million.”

You read that right! Jon Metsch was part of the same kind of financial mess at JCMC that currently plagues HUMC, yet Zimmer has entrusted him to serve as her representative on the HMHA board. The appointment follows campaign contributions and many letters of support for the Zimmer campaign. Metsch is also one of the founders of Hoboken Revolt, and was instrumental in leveraging the group for Zimmer’s political gain.

Painful audit, then Metsch quit JCMC

Here is a portion of an 9/26/06 article published by the daily newspaper and archived here about Metsch:

“The sea of red ink had been rising for years when, several months ago, Jonathan Metsch, the president and CEO of the Jersey City Medical Center, told state officials that the hospital needed $3 million more per month to keep afloat. The hospital had received several one-shot subsidies before… but before agreeing to this latest request, they wanted to make sure they weren’t throwing good money after bad.

So they asked Metsch – who also heads the hospital’s parent company, LibertyHealth – to conduct an audit, said state Health and Senior Services Commissioner Fred Jacobs. The findings of that audit, prepared by the Chicago-based Wells Springs Partners, were presented to the LibertyHealth board last Thursday night, a meeting Jacobs attended.

The next day, after a lunch meeting with board members, Metsch quit.”

Other reports on Metsch’s politically charged tenure at JCMC are even less flattering. Here is one from Jersey City’s Urban Times News entitled Jersey City Medical Center – What You Don’t Know Can Kill You. An excerpt from the 7/16/2003 report:

“Jonathan Metsch, the CEO of the ostensibly cash strangled institution gives himself a $100,000 raise each year. Metsch is currently at $850,000 a year, while crying poverty.

Cash flow problems are exacerbated by poor credit. Vendors are unwilling to supply the hospital except on COD terms. There are currently about $40 Million in delinquent payables. Consequently, suppliers ship urgently needed supplies overnight with the hospital paying express charges, and the suppliers charge top prices because of the poor credit and payment history.”

Did Zimmer do her due diligence before quietly appointing Metsch to help HUMC turn around? Why didn’t she announce the appointment? The more things change…

See original story on the HUMC Red Ink after the jump.

10/27/2009 Update:

HUMC is bleeding money!!!

2008 ends with a $22.3 Million LOSS

Those who stood up to say the $52 million plan to “save” St. Mary Hospital would only buy time for a flawed business model are sad to see the latest numbers are proving them right. According to audited financial statements released by the Hoboken Municipal Hospital Authority, Hoboken University Medical Center incurred a loss from operations in 2008 of $22.3 million, leaving it with net assets at the end of 2008 of $13,435,124. That’s down from net assets of $35,138,364 at the end of 2007. The burn rate is enormous!

(FULL 2008 REPORT HERE)

Massive decline in cash balance

At the end of 2007, HUMC reported over $7.5 million in cash on hand. That number dropped to $361,167 at the end of 2008. That’s about one day’s worth of cash and not enough to pay bills vendors are waiting longer and longer to see paid. The cash St. Mary owner Bon Secours left behind to help convince Hoboken into taking the hospital over is gone. So is former CEO Harvey Holzberg, who likely made millions while he was in charge.

Hudson Healthcare cashes in while Hospital bleeds

The private firm set up by Holzberg and his team to manage HUMC for the HMHA is listed as paid nearly $16,000,000 for their services in 2008, up from just over $12,000,000 in 2007. A select few have been getting paid handsomely while a $52 million taxpayer guarantee – and the jobs of Hoboken’s third largest workforce – hang in the balance. The HMHA still won’t release the General Ledger outlining all of their hospital’s financials to Councilwoman Beth Mason, even thought she sued and won the right to see it. Can you guess why?

HUMC needs a massive cash infusion to avoid doom

Former Mayor David Roberts sold his “Save St. Mary” plan by claiming the city’s $52 million dollar taxpayer guarantee on HUMC bonds would be enough to turn things around. A dedicated few led by then-private citizen Beth Mason pleaded with the City Council and Local Finance Board to consider a more viable plan to save the facility since the existing business model was clearly failing to the point that Bon Secours wanted to shut St. Mary down.

Those pleas fell on deaf ears.

Application for state assistance

The Hospital recently applied to the New Jersey Department of Health and Senior Services for a critical Health Care Stabilization Grant. In release Acting Mayor Dawn Zimmer claims, “HUMC is well positioned to receive this grant which will greatly assist the hospital with its short term needs.” She probably was told that by the HMHA. Turns out, not so much. Last year HUMC requested a $7.6 million grant and was given ZERO. The state Selection Committee determined Hoboken did not meet the criteria. This year the grant fund only has $9 million to go around for the whole state. Even if HUMC got half that (not likely) it would barely put a dent in its deficit.

Condition Critical – Code Blue

Will it only be a matter of time before the plug is pulled? Who do you trust to take on this challenge in the Mayor’s office? Will Dave Roberts’ prediction that the city may someday have to up-zone the property for high-rise development to recoup its losses come true?

1/26/2009:

Is the house of cards at Hoboken University Medical Center beginning to fall?

Layoffs, service and pay cuts likely ahead

Critics said putting the taxpayers on the hook for the $52 million dollar bond to continue operating a money losing hospital was dangerous and imprudent, but the thirst to add hundreds of new jobs to the public payroll (and hundreds of millions in revenue) was too much for Mayor David Roberts to resist. With an ironclad majority on the city council, he was able to swing the deal quickly despite strong arguments to go slow and do due diligence to protect the taxpayers. Within months the new management was touting a “miracle turnaround,” but it wasn’t long before they were forced to scale back their plans and restructure their debt obligations to free up cash flow. They continued to tout their miracle even as they went to court to block the public’s right to see their books. Now, the hospital is planning layoffs.

$2.2 Million Dollar Deficit

According to an October status report HUMC was running a $2.2 million dollar deficit. Now hospital management is working on a plan to cut at least $1.5 million dollars in payroll through layoffs and pay cuts. No word on whether HUMC boss Harvey Holzberg is taking a cut in his estimated $800,000 salary.

HUMC public relations chief Joan Quigley (also a State Assemblywoman) blames the “downturn in the economy” for the hospital’s problems. Others note redundant hospitals are closing all over the country, and what ailed St. Mary hospital continues to plague HUMC. Still, rich contracts have been granted to politically connected contractors now building the new emergency room, which may be complete in time for Mayor Dave Roberts to cut the ribbon before he leaves office at the end of June.

Surprise to the City Council

Last summer the management of HUMC showed up to the City Council to press for changes to their bonding with a pledge that they were “doing great” and that they would keep the council informed of their progress, good or bad. Apparently they haven’t communicated much since. Second Ward Councilwoman Beth Mason sent out this statement about the impending cuts:

“I am deeply upset at the news that the hospital will be laying off workers and very concerned that the declining financial health of the hospital that has been kept a secret until now. Again, there is a problem with transparency at the Hospital Authority that needs to be addressed.

The city council was being told through most of last year that the hospital was a “financial miracle.” This situation has been a long time in the making. When you put the state of the economy, that has been declining, together with the financial state of the city it raises significant concerns for me as an elected official, the employees and certainly for the taxpayers, who are already burdened with the recent tax increase.

At Wednesday’s city council meeting, I specifically asked about the financial condition of the hospital, which I know is running a deficit. Not one member of the administration or the corporation counsel bothered to inform the city council then of the hospitals financial situation.

For Mayor Roberts to brush aside concerns about the city’s $52 million investment in the hospital — and the financial condition of this institution — by saying the hospital property can be sold to developers is to betray a tremendous lack of understanding of the current real estate market and a total lack of sensitivity for those whose jobs are in jeopardy. Mayor Roberts’s fall back plan to sell the hospital property so developers can erect more luxury condos shows a lack of concern for the health care services provided to our community by the hospital.

I hope my colleagues on the council as I requested at Wednesday’s meeting will join with me in demanding full financial disclosure from the hospital authority.”

Meanwhile the board of the Hoboken Municipal Hospital Authority will meet at 7pm on Wednesday, January 28th to consider a budget. Don’t expect much more than a few opaque numbers on a few pages without details. The HMHA has spent many thousands of dollars trying to hide its true financial status from the public.