The New Jersey State Health Planning Board rejected New Jersey Department of Health staff’s recommendation and delayed approval of CarePoint Health’s planned sale of an additional $39.1 share. % ownership of Bayonne Medical Center operations at BMC Hospital, LLC.
This, combined with the existing 9.9% ownership of operations that BMC Hospital, LLC had already transferred to it from CarePoint, was intended to bring its total ownership of Bayonne Medical Center operations to 49% for a total of $4 million.
CarePoint has decided to exit the market and sells its assets, including Bayonne Medical Center. In 2019, he sold the property, including the building and land, to Avery Eisenreich, owner of retirement home operator Alaris Health.
As CarePoint sought an entity to purchase the operations, Hudson Regional Hospital ultimately purchased it from Eisenreich for $76 million in 2020. At the same time, CarePoint had announced that it had signed an agreement to sell the operations to BMC Hospital, LLC, founded by the investors behind surgical center chain Surgicore.
However, upon closing of the sale of the property, Hudson Regional Hospital announced its intention to operate the hospital, sparking an intense battle over Bayonne Medical Center operations that ensued for a much of 2020 and 2021. Since the start of 2022 there hasn’t been a lot of movement, but now things are picking up.
NJDOH recommendation rejected
BMC Hospital, LLC had previously filed a certificate of need in November 2020 to operate the facility and the NJDOH held a public hearing on the potential transfer in December 2021. The transaction had been recommended for approval by the DOH, which referred the matter to the Board of Directors for consideration at its April 7 meeting.
But after the request was advanced by the Department, it was learned that CarePoint had unilaterally begun the process of disposing of a majority stake in Bayonne Medical Center by transferring those shares to an unfunded nonprofit entity.
“As we have argued to the board, transferring controlling shares of CarePoint in the hospital to a not-for-profit organization raises numerous regulatory and legal issues, particularly because CarePoint’s plan to withdrawing from its role as majority shareholder leaves the continued source of funding to operate the hospital unclear, and the proposed minority shareholder, BMC Hospital, LLC, has been unclear regarding its anticipated source of capital, if any,” said Hudson Regional Hospital attorney Thomas Abbate.
“These series of transfers made in isolated parts simply do not form a whole. We have expressed concern to the board that if CarePoint is allowed to divest its majority stake and leaves behind an inexperienced minority shareholder and a new nonprofit with no operating history or financial endowment, the implications for the healthcare system of health are potentially serious. Hudson Regional has advised the Department of Health that it has serious concerns that the current ownership plan does not leave in place an adequate transition plan that is necessary to secure the future of Bayonne Medical Center. We look forward to seeing our arguments confirmed in further proceedings before the Council.
Application suspended until June
Since the start of the nonprofit conversion has significantly changed the ownership structure and source of operating funds for CarePoint, and is the subject of a new application for a certificate of need which has not been judged complete, the board rejected the DOH recommendation. The board has put BMC Hospital, LLC’s bid back on the drawing board until at least its June meeting.
Hudson Regional Hospital, owner of the Bayonne Medical Center property, has ongoing litigation against CarePoint over numerous defaults under its lease of the property, and has consistently opposed transfers proposed on the grounds that it is not in the best interests of Hudson County residents.
“This is another instance of CarePoint attempting to engage in financial engineering at the expense of the healthcare system, and the board rightly refused to accept this plan,” the spokesperson said. of Hudson Regional Hospital, Ron Simoncini. “If CarePoint is allowed to divest its interests in Bayonne Medical Center to a newly formed, cash-strapped entity controlled by local politicians and their cronies, the potential for mischief is limitless. Without a plan funding for the necessary capital and operational needs of the hospital, and without the proposal of a competent and proven successor hospital operator, the taxpayers would be solely responsible if the current plan fails.
Simoncini continued, “Clearly, CarePoint’s refusal to wait for proper regulatory approvals shows that its ownership is desperate to get out, and every step they take must be scrutinized or the community could bear the consequences. We’ve long maintained that the purpose of the transfer to a nonprofit was to evade accountability while allowing CarePoint to remove management fees as the hospital continued to lose money. CarePoint said it was selling a minority position to BMC, but its real intention was to sell the community.
BMC Hospital, LLC looks to the future
In response to the decision, a spokesperson for BMC Hospital, LLC said the board’s decision was unrelated to the CarePoint divestiture: “We appreciate the work of Department staff and members of State Health Planning Board and the need to exercise due diligence on this application. While we believe the limited transfer of ownership request that was before the board this week has nothing to do with CarePoint’s ongoing efforts to evolve into a not-for-profit structure, we fully expect to receive final board approval in June.
BMC Hospital, LLC being optimistic about the June meeting of the State Health Planning Board, CarePoint Health did not immediately respond to requests for comment.
For updates on this story and others, visit www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at [email protected].
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