State approves Secaucus hospital sale — a 'new day' for Meadowlands?

• New Jersey's acting State Health Commissioner approved the sale of Meadowlands Hospital Medical Center for $12.2 million
• The buyer is Yan Moshe, a real-estate developer who has a surgical center in Hackensack.
• Once the transaction closes, the new owner must apply to the state for a license.
• Local officials said it was important to retain Meadowlands as a community hospital.

The state has approved the sale of Meadowlands Hospital Medical Center, the Secaucus hospital where admissions have plummeted under private ownership, to a multimillionaire real-estate developer who owns a Bergen County surgical center. 

Despite concerns about the hospital's operating losses, its small number of patients, the financial viability of the sale and criticism from the union representing hospital nurses, the acting state health commissioner said he was afraid that denying the sale could deprive residents of Secaucus and surrounding Hudson County of access to health care.  

"Closure of [Meadowlands Hospital] would disrupt and decrease access to hospital services for the Secaucus community," wrote Christopher R. Rinn, the acting commissioner. The new owner must continue to operate it as a general hospital. 

Local officials had urged the state to approve the sale. Secaucus is crossed by the New Jersey Turnpike and several major highways and rail lines and is home to warehouses, distribution centers and industries. The hospital has provided the town with free ambulance service, amounting to 5,000 to 6,000 trips a year. 

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More:$12M bid to buy Secaucus hospital

The buyer, Yan Moshe, told regulators "there's much more than can be done to enable [the hospital] it to achieve its full potential, to provide high-quality and cost-effective health care services to residents of Hudson County." 

On Tuesday, he said, "My management team is committed to transforming Meadowlands into the type of community hospital and resource that the people of Secaucus and the surrounding area will be proud of.”

A spokeswoman for Health Professional and Allied Employees, the hospital union, said, "We are hopeful that this is a new day and that we will be able to have a working relationship with the new owner." Members are excited, said Bridget Devane, the spokeswoman. 

Meadowlands is a stand-alone hospital — not part of any hospital system — an increasingly uncommon status in an era of health care consolidation. It has been known in the past for high charges for some procedures, fees that it was often able to collect because it did not participate in many insurance networks.  

Moshe will put up $5 million of the $12.2 million sale price in cash. The balance is to take the form of a loan from the current owners, MHA, LLC,  a consortium of private investors whose principals are Richard Lipsky, Tamara Dunaev, Pavel Pogodin and Anastasia Burlyuk 

Moshe promised to negotiate with insurance companies for the hospital to join their networks, to seek agreements with community health centers to provide obstetric services for their patients, and to invest in improvements to attract physicians and operate more efficiently 

But both state Sen. Loretta Weinberg, a Teaneck Democrat who is the Senate majority leader, and the union have expressed concerns about the transfer of ownership.   

"How can a sale be considered if the true financial condition of the hospital and its prospective new operator are unknown?" Weinberg asked the State Health Planning Board in an Oct. 30 letter. 

“The Health Department has not been terrific on overseeing what went on at Meadowlands Hospital,” Weinberg said Tuesday. “What I’m hoping for is this operator will be more accountable to the patients, to the staff and to the community, and that the Health Department will be much more stringent in its oversight.”

The union asked the state to make sure the new owners would recognize it as the bargaining representative for employees, and would restore union health care benefits to their level before the hospital was sold to its current owners in 2010.

The union has estimated that the hospital owes its members as much as $2.5 million in back pay and benefits, as the result of a judge's decision in a complaint brought by the National Labor Relations Board. MHA appealed that decision. 

But Devane, the union spokeswoman, said attorneys were meeting with the labor board to secure the assets from the sale so that its members would receive money they are owed. 

MHA was fined $180,000 last month for overdue audited financial statements from 2014, 2015 and 2016 — funds that are to be docked from its Medicaid reimbursements. It has not provided state regulators with audited financial statements since 2013. 

The State Health Planning Board deadlocked at its first meeting in November to consider whether to recommend approval of the sale application. At a second meeting 19 days later, the board voted unanimously in favor.  

Rinn wrote in his letter of approval that even though he didn't know the current state of the hospital's finances, he was "satisfied" that Moshe had more access to MHA's financial records than the state did and Moshe could do his own evaluation of the hospital's financial viability. Rinn concluded, based on what Moshe told the state, that the sale would give the new owner "an opportunity to maintain and grow needed services." 

Once the transaction closes, Moshe's company — NJMHMC — must apply to the state for a license to operate the hospital. Moshe currently owns Dynamic Surgery Center on Essex Street in Hackensack. 

Moshe also plans to buy back the land the hospital sits on, his application said. It was sold for $18 million and leased back in 2012 in an arrangement between MHA and a Canadian real-estate developer.  

Rinn imposed several conditions that will effectively give his successor — who will be appointed by Gov.-elect Phil Murphy — the job of trying to extract financial information about MHA's current operations and guarantee financial transparency in the future.  

For example, Rinn said that if Moshe's company has in its possession any of the outstanding audited financial reports that were prepared for the current owners, it "shall submit" them to the state before it receives a license. 

Moshe also must tell the state — in annual reports for five years — about any funds his company transfers to related companies, to make sure that "assets and profits reasonably necessary to accomplish the health care purposes remain with the hospital." Any compensation to related companies must be "consistent with fair market value," the approval letter said. That appears to address the concern that MHA may have paid excessive fees for services and supplies to companies owned by its principals. 

The new owner also will be required to give the state quarterly unaudited financial reports, and post audited annual financial statements on its website.

The union spokeswoman said she hopes the state will do more to enforce its conditions on the new owner than it did on MHA.

"We can’t be the only one trying to enforce these conditions," Devane said. "We need the Department of Health to hold hospitals accountable if they do not meet these conditions and regulations."    

Rinn was unable to require the new owner to provide unionized workers with health benefits equivalent to those before MHA's 2010 takeover, he said. Instead, he said the health benefits must be equivalent to current benefits the employees receive.  

A spokesman for Meadowlands’ current owners said Lipsky, the primary investor, looks forward to completing the sale.

“He is proud of the progress Meadowlands has made since his team purchased the hospital in 2010,” said the spokesman, Al Gaburo of Princeton Public Affairs Group.

"The hospital has stabilized its bottom line, and the many investments in the physical plant and technology have set the table for Mr. Moshe to take Meadowlands to the next level.”