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Hospital management company files Chapter 11, hospital to continue operations leading into potential sale with Holdco

Hudson Healthcare, Inc. announces:

HUDSON HEALTHCARE, INC FILES FOR CHAPTER ELEVEN BANKRUPTCY
 — Manager of Hoboken
University Medical Center Initiates Bankruptcy Proceeding to Facilitate Sale of
Hospital to HUMC Holdco LLC —
HOBOKEN, NJ, August 1,
2011 —
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.
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Talking Ed Note: The management firm of the hospital is filing for bankruptcy protection.  The management firm’s board was recently reconstituted with new members by the Governor.  
It’s clear the management firm’s seeking Chapter 11 is required to protect the continued operation of the hospital leading into the potential sale with Holdco.  
This puts to rest the voices who insisted the hospital could continue to operate as before.  The accounts payables were growing and clearly reached unsustainable levels requiring the management arm of the hospital to take this step.  MSV was tracking the outstanding accounts payable back when they were $16 million and hears they now have topped over $24 million.  Vendors will likely receive some obligations paid in an eventual settlement.
Based on this necessary action by the hospital’s management firm, Hoboken now knows who was telling the truth leading into its potential sale.
Another public hearing is scheduled on the potential sale August 4th in Trenton.    
The most important note here is the hospital will continue to operate and serve the public.  Obviously Hoboken needs this sale to go through with Holdco.

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