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Council VP Cunningham: Make your feelings known on saving the hospital & with it Hoboken

From the desk of 5th ward Councilman Peter Cunningham:

Friends, Family and Neighbors,

And yes again, we are at a very critical juncture in Hoboken’s
history. Tomorrow night at 6pm, City Council Chambers, the minority
council will have another opportunity (and perhaps last) to favor the
immediate approval of the necessary parking agreement so the new
entity can USE the mid town garage for it’s employees and patients.
It is the final piece to close the hospital financing to save
Hoboken’s hospital and relieve the City of it’s $52 million bond
guarantee. It is a condition to close the transaction which should
have happened Wednesday, but the minority council of Mason, Russo,
Castellano and Occipiniti voted no!

As many of you know, the process for the City to divest itself of
Hoboken Univ Medical Center has been on going since the Mayor
appointed (and the Council confirmed) a series of highly qualified
individuals tasked with this goal in mind – sell the hospital under
our conditions (set forth in the Request for Proposal) that would keep
this valuable and historic healthcare entity to serve Hoboken and the
Hudson County region, AND relieve the City and it’s taxpayers from the
$52 million bond guarantee.

This action tomorrow night is our last chance to save our hospital and
relieve us of the guarantee that surely will be exercised if we cannot
close this transaction. Please attend this meeting and/or write your
councilperson/s to demand that they support this measure. It is our
last hope.

The following piece was provided by one of the Board members, which
provides a bit of history and understanding on this very important
matter.

Please circulate as well. Thanks, Peter





The Case for Selling the Hospital

On October 7th a federal bankruptcy judge in Newark approved both the
settlement agreement between all interested parties, and the sale of the
Hospital.

On October 21st, New Jersey’s Commissioner of Health and Senior Services
issued a Certificate of Need for the transaction, the final necessary
regulatory approval to transfer ownership of the Hospital.

The transaction’s path to closing has been undermined by the City Council
minority, where four members have ignored a public policy imperative to get
the sale done, and turned the process into a political confrontation focused
simply on undermining the Mayor – even if it triggers a the fiscal calamity,
that is, an immediate call on the $52 million in City guaranteed bonds.

The City took over the failing Saint Mary Hospital in 2007 using a
convoluted governance/ management structure that in large part has led to
the current problem. Councilman Russo voted for the City takeover, which was
meant to be a short term bridging plan.

A few weeks ago Council members Russo and Mason orchestrated a plan to
defeat a self-funding $5 million bond ordinance which was part of the
Mayor’s exit strategy to privatize the hospital and assure its
sustainability.

Last week the same Council members blocked immediate implementation of an
ordinance allowing the buyer to lease parking transponders, so the new
hospital owners could continue to using the parking garage. Now, the sale
cannot be closed until the twenty day clock expires.

As a for-profit entity the Hospital will pay property taxes of well over
$500,000 per year!

With the recent public disclosure of three other bids it is important to
note that the mythology that Council members Mason and Russo planted about
the viability of other offers was just political shenanigans. It was easy
for the other bidders to “reinvent” their bids after the selected buyers
proposal was posted on the Authority and City web-sites. But they were still
deficient proposals.

Nonetheless we are right on the finish line. Governor Christie provided $5
million to add to the amount to be distributed to creditors, additional
payments were made by the buyer, and numerous other small steps were
identified to fill in the funding gap.

In 2007 after Bon Secours signaled its intention to walk-away from Saint
Mary Hospital in Hoboken, and a merger strategy failed to identify a
partner, the City of Hoboken, enabled by special state legislation,
established the Hoboken Municipal Hospital Authority which became the owner
and governing Board of the hospital. As part of the change of ownership the
City guaranteed $52 million in bonds to be used for capital projects. The
hospital was renamed Hoboken University Medical Center. (H.U.M.C.)

When the ’07 Audited Financial Statement was finally issued in September ’09
it showed a $23 million loss, followed by a $10 million loss in ’08, both
bottom lines further adversely exacerbated by significant increases in
accounts payable. The hospital was in a “zone of insolvency.”

Mayor Zimmer recognized the challenges facing H.U.M.C. and took immediate
action beginning in November 2009 when elected Mayor of Hoboken and became a
Commissioner on the Authority.

Immediate actions were taken to stabilize the hospital including:

–       New Commissioners were nominated including a former New Jersey
health system CEO, a regulatory/ compliance attorney, a municipal bond
underwriter, a bond insurance executive with extensive restructuring
experience, and a health care company in-house counsel – all residents of
Hoboken.

–       Where previously there had been only a Finance Committee (which did
not publish minutes), and a Quality Committee with only one outside Board
member on it (chaired by an ex-officio physician member), two new committees
were immediately establish – Audit and Compliance, and Strategic Planning.

–       Playing catch-up to industry “best practices” an operations/
financial performance/ quality dashboard was put in place.

–       Having missed the opportunity in ’09, an application was made for
Health Care Stabilization funding and the State awarded the hospital $7
million in 2010.

Then Mayor/ Commissioner Zimmer established the following goals for the
Hospital:

–       Ensuring that H.U.M.C. remains open as a full service, acute Care
hospital providing access to quality medical care for all Hoboken residents
and neighboring communities

–       Maintaining the almost 1200 jobs of our valued hospital staff

–       Respecting the commitment of the Hospital’s medical staff to the
Hospital over the recent challenging years.

–       Addressing the Commissioner of Health and Senior Services
regionalization objectives of reducing excess capacity and Hudson County
hospitals’ reliance on extraordinary State financial subsidies

–       Relieving the City of Hoboken from the financial obligation of the
bond guarantee while,

–       Achieving Hospital sustainability by “privatization,” that is
finding a new owner with access to capital so the Hospital is able to
consider new program development, acquire advanced technology, and maintain
the facility.

Next, the Hospital Authority chose a financial advisor and special counsel,
an RFP Process was established and implemented, proposals were evaluated,
and a “buyer” was selected by a unanimous vote of the Authority.

Mayor Zimmer established a close working relationship with the Governor’s
Office, the Commissioner of Health and Senior Services, the NJHCFFA, and
DCA.

Despite overwhelming legacy issues we are on the cusp of guarantying that
H.U.M.C. remains an acute care hospital  for all residents of Hoboken, those
who work in Hoboken’s bustling business community, the thousands of
commuters who pass through Hoboken every day, the residents of neighboring
communities, and maintains its critical role in emergency preparedness.

“Re-Privatizing” the Hospital will bring it stability, access to capital,
and the ability to compete in the hospital marketplace without dependency on
state subsidies and cash advances. It will also relieve the City of the bond
guarantee, freeing up bond capacity for other necessary and immediate
infrastructure improvements.

This Essential Safety-Net Hospital management transformation initiative –
hospital sustainability through privatization – will be a “self-sufficiency”
model for replication elsewhere in New Jersey.

Under the Mayor’s leadership H.U.M.C.’s finances were stabilized,
sustainability goals were established, an RFP process for the sale was
managed, an Asset Purchase Agreement was negotiated with the buyer, and the
transaction was successfully moved through bankruptcy proceedings and the
Certificate of Need process.

Although the Hospital is a “third-rail” of Hoboken politics Mayor Zimmer had
the courage to tell Hobokenites that the Hospital is on the verge of closure
unless this sale is consummated immediately.

The choice is simple. Support the Mayor’s actions to navigate around the
Council minority’s obstructionist tactics.

Or Hoboken will no longer have an acute care hospital but a financial
meltdown instead.


Peter Cunningham
201-562-7071

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