HOBOKEN – Mayor Dawn Zimmer announced today that the “last legal hurdle” to complete the sale of the city-owned hospital was cleared Thursday with federal bankruptcy court approval.
The $65 million deal should be closed within two weeks, officials said, after the judge approved a $10.2 million settlement agreement for the various vendors that were owed $34 million by the hospital.
The only hurdle left is clearance from Commissioner Mary O’Dowd of the state Department of Health and Senior Services (DHSS). A department spokesperson said O’Dowd has until early December to make a decision following the State Health Planning Board’s recommendation to approve in August.
It is assumed the state will sign off. Trenton played an integral part in getting the deal to the finish line, with Democrats providing $11 million in the state budget to pay bond penalties and Gov. Chris Christie promising another $5 million to pay off part of the hospital debt. DHSS also provided a $2.5 million loan to the hospital this summer to keep the facility running while the sale was being completed.
“This is the best possible outcome for the citizens of Hoboken,” Zimmer said in a statement today. “We will now be able to save our hospital and preserve the financial health of our City. This is a huge milestone and the final legal hurdle.”
Over 1,000 jobs would have been lost and the city would have been responsible for $52 million in bonds, she said, if her administration wasn’t able to complete the deal with what they found to be the only buyer worth negotiating with.
A sticking point for the city’s officials handling the sale – spelled-out in the bid request – was for the hospital to maintain all of its services while remaining an acute care facility for at least seven years.
The eventual buyers, owners of Bayonne Medical Center, were the only bidder willing to keep all of the services in-house. Other bidders, like Jersey City’s Christ Hospital and Jersey City Medical Center, made offers that would have consolidated some services, for instance moving their birthing centers to Hoboken, while shifting other services out of the Hoboken facility. These bids were rebuffed by the city’s hospital board and officials directing the sale.
Contrary to Hoboken’s insistence to maintain every service, the state issued a report this year recommending Hudson County hospitals begin consolidating services to save money. Christie’s administration has been trying to wean those hospitals – HUMC, JCMC, Christ’s – and others off annual subsidies called stabilization funds. The state gave those three hospitals $21 million in 2010, more than half of the funding statewide.
The state report recommended consolidation of services, or sale and redevelopment of one of the hospitals in the region.
Although the Hoboken sale was constructed to discourage consolidation, it did move the hospital into the hands of a for-profit entity – effectively ending any state stabilization funding, which is reserved for non-profit facilities.