Staff Cuts Felt At St. Mary's Hospital In Passaic Before Takeover Approval

The Record ( — Wednesday, April 2, 2014

The Record

St. Mary's Hospital in Passaic has terminated or reduced the hours of 30 employees while waiting for state approval of a sale to a for-profit hospital chain, a move critics said runs afoul of a promise made by the potential new owners to retain staffing levels.

Hospital leaders said Wednesday that the cuts were necessary to help stabilize the budget and keep the facility open until the state health commissioner and a Superior Court judge approve the sale to Prime Healthcare Services, most likely by late spring or early summer.

"There were several reasons for this painful but necessary step," Vanessa Warner, a hospital spokeswoman, said in an email. "In order to stabilize the budget and keep the hospital open, these difficult choices — sadly — had to be made."

But critics say Prime is "calling the shots," and the company wanted the employee reductions before it takes over the failing hospital. Prime promised in its proposal to purchase the 269-bed facility that it would retain staffing levels.

"It is very clear that despite the fact that the sale hasn't been approved, Prime is managing and reorganizing this hospital," said Renee Steinhagen, director of the New Jersey Appleseed Public Interest Law Center, which advocates for the public in for profit takeovers of non-profit hospitals.

The current leaders of the hospital denied Wednesday that they were being influenced by Prime.

"The St. Mary's Hospital management team is solely responsible for the operation of the hospital and has made these difficult decisions to keep our hospital open," Warner said Wednesday afternoon.

Critics also point to how the hospital has handled its deals with insurance companies since Prime entered the picture.

Only days after Prime promised the state Board of Health that it would work with insurers so St. Mary's would remain in-network for many residents, St. Mary's executives terminated contracts with two major insurance companies, UnitedHealthcare and Cigna.

"The decision not to honor certain insurer contracts and making changes that impact employees' hours or layoffs undercut the conditions the board of health had included as part of their recommendation," Steinhagen said.

Prime denied any role in the decision about layoffs and reduced hours.

"St Mary's management team is solely responsible for the operation of the hospital," Edward Barrera, director of communications at Prime, said in an email that echoed Warner's statement.

St. Mary's, founded 120 years ago by the Catholic Sisters of Charity of St. Elizabeth, has been teetering on the edge of financial ruin for several years and has been propped up with nearly $40 million in state aid since 2009. It emerged from bankruptcy in 2010 but still serves an impoverished population — a quarter of its patients are uninsured or underinsured.

It is the sole remaining hospital in Passaic, a city of 70,000. Without a takeover, the hospital will be shuttered, hospital executives said. The state health board has recommended that Mary O'Dowd, New Jersey's health commissioner, approve the sale. She has until June 13 to make her decision.

Prime, which owns 25 hospitals in six states, will spend $30 million to acquire St. Mary's, and invest millions more in capital improvements at the hospital, including replacement of the elevators and installation of new technology. The company also promised to put $10 million toward the hospital's underfunded pension system and has already spent $5 million in capital upgrades.

It is fighting desperately to get a foothold in New Jersey, where for-profit companies are purchasing hospitals at a steadily growing pace and turning financially desperate hospitals into moneymakers. Prime has applications to buy three other hospitals besides St. Mary's, including St. Michael's in Newark.

During public hearings on the sale, many of St. Mary's 1,200 employees and city residents pleaded with state officials to approve it. They say Prime is St. Mary's last hope.

On Wednesday, Douglas Placa, executive director of the union for the 480 nurses and licensed technical employees at the hospital, said his members are "in favor of saving the hospital. This seems to be the only avenue for St. Mary's, and the members want the sale to be completed and move on to the next phase of its existence."

Opponents realize St. Mary's needs financial help but say Prime is not the answer. The company is under federal investigation for allegations that it has overcharged Medicare.

Hospital executives confirmed the layoffs Wednesday, though they didn't say when they went into effect or specify how many employees were let go.

"Organizational changes were made across the board, and included union and non-union positions alike," Warner said. "Several were in management and ancillary services to ensure that bedside care would remain at the same high quality."

Opponents doubt this is possible.

"The nurses are still there but if the support for the doctors and nurses isn't there, it's still bad," said India Hayes Larrier, organizer at New Jersey Citizen Action, a citizen watchdog coalition.

Placa said he was informed only one union member was affected and would be laid off.

Two people, who contacted The Record and identified themselves as employees but declined to give their names, said the department heads of security and radiology as well as the operating nurse manager were among those who lost their jobs.

"This is exactly what we feared would happen — jobs would not be secure and the community might suffer," Larrier said. "I have no doubt Prime is calling the shots. I don't think this sale can be stopped, but I hope the commissioner puts a state monitor in before approving the sale, just as we asked."

Copyright 2014 North Jersey Media Group Inc.

Top Top | NJCA Homepage | NJCA in the News