Hudson Reporter

Profits And People — What Does The Impending Sale Of Meadowlands Hospital Mean For Patients?

The Hudson Reporter — Sunday, October 17, 2010

by E. Assata Wright
Reporter staff writer

With the sale of Meadowlands Hospital Medical Center inching closer to receiving the necessary state approval, the biggest question that remains is what, if anything, will the sale mean for the patients who rely on the facility's services?

Ever since the hospital's current owner, the non-profit LibertyHealth System, announced its intention to sell the facility to the for-profit MHA, LLC, the impending deal has been viewed with much caution by state agencies that must approve the deal and health advocates alike.

State agencies that must approve the deal — the Office of the State Attorney General, the Department of Health and Senior Services, and the State Health planning Board — have taken the better part of this year to review the sale. The buyers had hoped to have the deal wrapped up by last spring.

"I think what we're seeing is the state exercising prudence with regard to a nonprofit asset being moved out of the nonprofit world and into a for-profit company. There is always hesitancy in privatizing things," MHA's lead principal, William Vazquez, conceded last summer.

"Traditionally, there has been a recognition that the provision of health care needs to be the primary mission of any hospital," said Ev Liebman, director of organizing and advocacy for New Jersey Citizen Action. "Once you move into the for-profit realm, what becomes the primary mission of any for-profit entity is return on investments to its shareholders or investors."

In one preliminary document provided to the Department of Health and Senior Services, MHA noted that its investors could expect to receive a 43 percent return on their investment within a few years.

Thus, if MHA's reported $15 million purchase of the hospital is approved, there is some question how the company will balance its obligation to its shareholders with its mission to provide quality health care to the community. Specifically, will the hospital's services change to attract more patients and profits?

The short answer appears to be yes.

Last summer, MHA detailed a number of improvements the company plans to make to the hospital to generate more income. The company plans to create a new oncology program at the hospital, upgrade and expand the emergency room, and improve the facility's medical imaging technology. The company plans to purchase a new $4 million MRI machine.

In an effort to attract new business to Meadowlands Hospital, MHA "is actively trying to recruit physicians from different medical disciplines to improve the patient flow of the facility," said spokesman William Maer.

But as some departments are expanded, could others — ones that perhaps attract fewer patients or generate less income — be cut back?

"The New Jersey Department of Health and Senior Services will likely require MHA to keep Meadowlands an acute care hospital for at least seven years," said Renee Steinhagen, an attorney with New Jersey Appleseed Public Interest Law Center. "They will be required to maintain all core clinical programs. And if they want to cease providing that, they will have to make a formal request to the department. But you can be an acute care hospital and not have half the departments you'd associate with a hospital, for example obstetrics. And that's a big one because that is where you'll see a lot of uninsured and undocumented patients. So obstetrics becomes very expensive."

As an example, Steinhagen pointed to Memorial Hospital of Salem County, which was bought by the for-profit Community Health Systems (CHS) eight years ago. When the Department of Health and Senior Services approved the sale, CHS was required to remain an acute care facility for 10 years. Recently, however, the company has asked for state permission to close all of its obstetrics and gynecological services.

Steinhagen suspects these departments likely bore the biggest share of the hospital's charity care and New Jersey Appleseed has asked the Department of Health and Senior Services to consider whether the hospital is trying to "evade" its charity care obligation — required under New Jersey state law — by shuttering its OB-GYN services.

What about insurance?

It also remains to be seen whether MHA will successfully negotiate "in-network" agreements with the major health care providers in the area. Such agreements would allow people who are covered by these insurers to continue to use Meadowlands Hospital for their medical needs, should they require hospitalization.

But such agreements are not automatic; they will have to be negotiated. Should MHA not be able to negotiate "reasonable managed care contracts" with local insurers, the company wrote to the Department of Health and Senior Services, then patients using Meadowlands Hospital will have to use it as an out of network facility — which can add thousands of dollars to hospitalization costs.

A similar situation unfolded at Bayonne Medical Center after it, too, switched from being a nonprofit facility to a for-profit. Bayonne Medical dropped its contracts with some insurance carriers, forcing the companies to pay full price for hospital services, rather than the discounted rates a contract would provide.

The result was a nightmare for patients who were told by their insurers that they would have to cover the costs of their treatment.

The standoff between Bayonne Medical Center and Horizon Blue Cross Blue Shield landed in court last year.

More similar than different?

Ultimately, however, Steinhagen said few details separate for-profit hospitals from their non-profit counterparts, especially if state agencies impose limits on what for-profits hospitals can do.

"You know, there are executives who run non-profit hospitals who get millions of dollars in salary. But you never hear anyone up in arms about that. People only make an issue of it when they're talking about the executive at a for-profit entity. Through our advocacy, and the advocacy of others, we've been able to get certain requirements imposed on these for-profit entities that minimize the difference between a non-profit and a for-profit."

Among the many condition health advocates would like see imposed on MHA as a condition of its purchase of Meadowlands Hospital include the requirement that: the company notify the Department of Health and Senior Services of any changes in the company's investment structure; all documents submitted to the state by MHA be available for public review; that current health insurance contracts be continued; and that MHA continue all current clinical and community health programs, and maintain currently levels of charity care for the uninsured.

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