Christ Hospital CEO Defends Decision to Sell Hospital at Packed Community Meeting

NOTE: This story has been updated.

Christ Hospital CEO Peter Kelly last night defended his decision to sell cash-strapped Christ Hospital to the for-profit California hospital chain Prime Healthcare Services, making his remarks to the roughly 100 people who had gathered at an often heated community meeting to discuss the pending sale.

The lightning-rod for-profit hospital chain set to buy Christ Hospital has been plagued by accusations of improper and harmful billing practices and is the subject of a federal investigation focused on its Medicare billing. But Kelly has stood steadfastly by the deal, and at the meeting said his hospital, located on Palisade Avenue in the Jersey City Heights, had to sell or would face closure.

He said Christ Hospital had been fortunate over the six years he’s been there to be able to use its own resources, including the sale of property and what he described as “nonstrategic assets,” to make up for the budget shortfalls it has faced year after year.

“The money the state has not been able to provide to us, we’ve been able to provide for ourselves,” Kelly told the crowd. “But the problem we’re facing now [is] those assets are running out.”

The two-hour meeting, organized by the group Save Christ Hospital, was held at the Abundant Joy Christian Center off Central Avenue. As it went on, Kelly took fire from Save Christ Hospital meeting organizers Michael Yun and Paul Bellan-Boyer, heard an emotional appeal from nurses’ union leader Ann Twomey, dealt with interruptions from community leader Jeff Kaplowitz, answered a dozen questions from the crowd and heard accusations from Jersey City Medical Center (JCMC) President and CEO Joe Scott, who has been vying for an open bidding process and would like to purchase the hospital with partner organization rather than see it sold to Prime.

Scott twice took the microphone in heated personal exchanges with Kelly, lambasting his counterpart for not considering a sale to the medical center. Kelly had a meeting with Scott on July 25 about the possibility of a partnership between the two hospitals only to announce the deal with Prime Healthcare a day later.

Kelly argued throughout the evening that JCMC’s more than $100 million of long-term debt made a sale to them impossible, and that Christ Hospital, which doesn’t hold debt but lacks cash flow, needs an immediate infusion of capital.

“Nothing in this acquisition will preclude Christ Hospital looking at potential collaboration with any institution, with Jersey City Medical Center or others, but prior to money coming into the hospital, that’s not a possibility,” Kelly said.

“How do we ensure we’ll be here in the future?” he went on. “Sometimes you have to think out of the box. One of those out-of-the-box thoughts is looking at the role for-profit hospitals play in this country. I’m the first person to say they’re not the end-all, they’re not the solution, but in some cases, and I believe Christ Hospital is one of them, they do play an important role.”

The questions leading up to Scott’s final remarks came from county freeholder and Hoboken police captain Anthony Romano, who worried officers would be out of network at a for-profit Christ Hospital, and wanted the local government to get more involved in the decision-making process. Also speaking out was a priest from St. Peter’s College who said he was concerned Governor Christie was more interested in spending money on corporate tax breaks than funding hospitals.

A minister from the Second Reform Church on Summit Avenue said he was concerned for the health of his parish, and members of Occupy Jersey City and the Jersey City Peace Movement spoke about their concerns about what they described as a lack of transparency with the sale.

When the issue of transparency was raised, Kelly chose to interpret the question as relating to the attorney general’s vetting of the sale. However, the fact that no one from the attorney general’s office appeared at the meeting did little to ease tension. Gov. Christie this week announced Jeff Chiesa as the acting attorney general; Cheisa will step in to replace Paula Dow, whom Christie nominated for a state Superior Court judgeship.

“The commissioner of Health and Senior Services declined the invitation, the attorney general accepted it and confirmed it last Wednesday, and this afternoon said they would not be coming,” Bellan-Boyer told the audience. “I will leave it to you to speculate why they found it more important to be somewhere else than to be here.”

Renee Steinhagen, the executive director of the New Jersey Appleseed Public Interest Law Center, filled the time that had been reserved for Chiesa and Commissioner of Health & Senior Services Maureen O’Dowd and drew attention to the value of government oversight of the sale.

“It’s sort of ironical I should be speaking in lieu of the attorney general and the department of health because it’s usually Appleseed, with the backing of community organizations, that’s trying to get the government to do what they’re supposed to do,” Steinhagen said.

While Scott and other speakers continued to make the argument for an open bidding process, an opportunity the hospital’s board chose not to pursue, Steinhagen was resigned to the fact the sale will go through.

She argued that the last best hope to protect the value of the hospital’s charitable assets was for the attorney general to fully assess the current fair market value for the hospital’s property. She said that once Christ Hospital is no longer a community asset, future resale of the land and business will not be subject to any such oversight — a process, she explained, that allowed the formerly nonprofit Bayonne Hospital to be turned for-profit for the price of $18 million, then resold for $58 million.

For Steinhagen, the most pressing concern was the issue of Prime Healthcare’s rumored sale-leaseback of Christ Hospital’s real estate. By waiting until after the attorney general approves the sale before selling the land and leasing it back from Medical Properties Trust, the owner of Bayonne Medical Center and Hoboken University Medical Center, Prime Healthcare could reap the cash infusion as a profit for its investors and be exempt from having to reinvest the money into the hospital.

And because the current deal with Prime Healthcare only guarantees the hospital remain open for five years after the sale, there’s concern Medical Properties Trust will have no financial incentive to lease the land to three competing hospitals and will find a more profitable tenant for some of its properties instead.

“It’s kind of weird that the company who’s going to buy the property and lease it back is expecting a long-term lease, but the company that’s buying to operate is only guaranteeing five years,” said Kaplowitz, a local real estate agent. “I need to know what the answers are before I can make a rational decision to support you or not support you.”

Photos by Adam Robb

Adam Robb

a frequent contributor to the Jersey Journal and NJ.com. He is a freelance writer living in Jersey City, whose work has appeared in publications including Philadelphia Weekly, Atlantic City Weekly, and Time Out New York. His own blog, The Life Vicarious, has appeared on CBS Sunday Morning, and has been featured in The New York Times and on the New York Post‘s Page Six.