Steve Rofsky was a new resident in Hoboken when he attended a meet-and-greet for mayoral candidates in the Maxwell Place condo building during election season 2009. The city faced a tough financial situation after guaranteeing $52 million in bonds in 2007 to save Hoboken University Medical Center.
Rofsky told Dawn Zimmer and other candidates about his career as a risk manager for a bond insurer, monitoring a portfolio of 364 hospitals.
“I said to them, ‘If you’re elected mayor, I’d be glad to help if you had any questions,’ ” Rofsky said last week.
In 2007, St. Mary Hospital was run by Bon Secours and faced closure due to financial problems. Then-Mayor David Roberts helped save the facility when the City Council guaranteed $52 million in bonds to keep it alive. However, if the hospital were to fail, the city would have to pay off the bonds, plus interest, creating a large budget hole for the city and the taxpayers.
Mayor Zimmer, who made it a goal of her administration to sell the hospital to private owners, took Rofsky up on his offer after she was elected. She asked him to serve as a commissioner on the Hoboken Municipal Hospital Authority, a municipal board that last week completed the sale of HUMC.
Last week, Rofsky said he was stopped and thanked on the street by a resident for helping sell the state’s oldest hospital to HUMC Holdco, an ownership group from Bayonne Medical Center.
‘It’s a tremendous feeling.’ – Steve Rofsky
But the wounds from the political bickering during the process have also lingered.
The sale and bankruptcy
The hospital has been running with the help of state stabilization funds for the last few years.
In the summer of 2010, the sale process began. The HMHA sent out requests for proposals, and started conversations with eight bidders. After reviewing eight bids, the HMHA began negotiations with HUMC Holdco in early January of 2011.
Zimmer soon became the face of the deal, a move she says had to happen.
“I needed to take an active part in working with the state and building a relationship to tell them how important this hospital is to our community,” Zimmer said.
She said that there were many times she believed the sale would fall through and that the hospital would close because there wasn’t enough time to re-negotiate a deal before it ran out of money.
One of the more heated moments of the sale process came after the hospital’s operator, Hudson Healthcare Inc., declared bankruptcy on Aug. 1.
The sale made national news after Donald Scarinci, the former attorney for the HHI who resigned shortly before the bankruptcy, alleged in a court filing response to the hospital that the Municipal Hospital Authority had purposely forced the hospital into bankruptcy by withholding funds. That would allow them to settle claims with creditors quickly, and would allow for a clean financial slate to help the sale go through.
However, Hospital Authority officials have denied Scarinci’s claims.
Scarinci, when reached by phone last week, did not wish to give any further comment for this story.
The accusations gave fodder to political opponents of Zimmer who have criticized the sale process all along. But Zimmer said the judge “gave no credence” to the accusations.
After the story broke, State Sen. Loretta Weinberg (D-Teaneck), who the same week had held a state senate subcommittee hearing on for-profit hospitals, called for the state attorney general to step in and investigate the sale. The attorney general has since refused to confirm or deny whether an investigation was launched.
“I called [Weinberg] directly,” Zimmer said last week, “and said ‘What do you know about the allegations?’ She said she knows what she read in the paper. It’s the responsibility of public officials, if you find evidence of wrongdoing, to take that evidence and turn it over to the authorities. To take what she read in the newspaper and to turn it into a vicious attack on the HMHA members, it was a disgrace.”
When asked why she believes the state’s politicians became involved, Zimmer said she thinks the hospital got dragged into an ongoing controversy about non-profit hospitals becoming for-profit in New Jersey. So many hospitals are losing money that they are being sold to private companies. Some fear that those companies will drop essential (but unprofitable) services in order to increase profits.
Holdco will run a for-profit facility.
Zimmer, who has publicly supported Republican Gov. Christopher Christie, believes her relationship with the governor may have also escalated the situation.
“I’m a strong Democrat, but I have been attacked for working with Gov. Christie,” Zimmer said.
As part of the bankruptcy proceedings, a committee of creditors – those owed money by the hospital – deposed nine people involved in the sale. Zimmer was never deposed, according to court documents.
Councilwoman Beth Mason, a Zimmer foe, has repeatedly asked for the depositions to become public. However, Toni Tomarazzo, the chair of the HMHA, said last week that the city was ready to release the depositions, but was barred from doing so due to a court order at the request of the creditors. Zimmer also said she was ready to release the depositions.
Former hospital CEO Vincent Riccitelli, as well as some members of the HMHA and former HHI board members, were deposed in early September, documents show.
Zimmer had told the City Council from the beginning that they would have nothing to do with the sale, and they wouldn’t have to vote on the deal. Council members like Mason have complained about not being involved, saying the sale process was not transparent. However, Zimmer’s allies have countered that sensitive negotiations have to remain confidential.
But Mason and her three allies on the council ultimately got the opportunity to affect the sale’s outcome, because the council had to vote on several measures that allowed the sale to proceed.
In order to get an initial bankruptcy settlement proposal with the creditors approved, Zimmer needed a ‘yes’ vote from five council members. One of Zimmer’s allies, Councilwoman Carol Marsh, was in Nicaragua after a family emergency, and called in to vote.
“I was literally sitting next to [bankruptcy attorney] Paul Hollander with my fingers crossed hoping that she wouldn’t get disconnected,” Zimmer said. The settlement passed 5-4.
In late September, when Zimmer asked the council for $5 million to contribute to a bankruptcy settlement, her four opponents stonewalled the request. The council needs to approve a bond by a supermajority of six votes for it to pass.
“I went home that night thinking the deal was not going to work and we would face the closure of the hospital,” Zimmer said. If a settlement was not approved with the creditors’ committee, the creditors in the approximately $34 million bankruptcy filing were going to go after the city for the money.
The mayor’s council foes voted against the deal, saying they had concerns about the sale, including the fact that they had been kept in the dark during the negotiations.
The next day, a representative from Gov. Christie’s office called Zimmer to tell her that the governor was willing to pitch in $5 million of state money for the settlement. The sale continued.
Some critics noted that owners of Holdco had donated $25,000 to a political action committee supporting Christie in recent years. The parents of a Holdco owner also had donated $5,200 to local Assemblyman Ruben Ramos (D-Hoboken), who had sponsored an $11 million earmark to help the hospital during the summer. (Ramos’ staff said the donation was ultimately given to St. Joseph’s School for the Blind in Jersey City after the Holdco connection came to light.)
The parking fight and the big finish
Christie’s pledge kept the sale going, but then there was another roadblock.
The city had been negotiating a parking access agreement between the city and hospital buyers. According to numerous e-mails obtained by the Reporter, that aspect of the deal was negotiated for months. The new owners will get 400 transponders (which allow garage access), but not designated spots, for the garage adjacent to the hospital for 99 years, and will pay market rate if the facility no longer operates as a hospital.
The operators will pay $45 per month per transponder for the first three years, and $65 per month after that time. They will also have access to 600 transponders for two municipal garages on Hudson Street.
Zimmer went to the council to approve the deal, saying that the hospital buyers would not close on the sale until it was approved. Zimmer’s five council allies voted to approve the deal, but there was a problem. Zimmer wanted it to go into effect right away because the hospital was losing so much money that they couldn’t afford to wait any longer to close on the sale.
To skip the normal 20-day waiting period for an ordinance to go into effect, Zimmer needed six votes. That meant getting one of her opponents to vote with her allies.
Zimmer said Councilman Tim Occhipinti was crucial to helping his colleagues change their vote to implement the parking agreement. However, Occhipinti declined to comment on the issue when reached by phone last week.
In fact, his allies did something behind the scenes. Just before the vote on Sunday, they announced they reached a side agreement with the new owners. They announced that they had earned several givebacks from the owners in exchange for their votes: Including a written agreement to keep the hospital as a hospital for seven years, and placing someone from the council minority bloc on a new hospital committee.
Several of the agreements reached were previously announced by the HMHA and new owners, including the seven-year guarantee. But what was new was the one seat on the hospital’s community advisory board for the council minority.
After tremendous public pressure from hospital and city employees, the council voted to make the parking agreement effective on Sunday night.
The end of the road
The sale was officially closed on Friday. Zimmer received a certificate from a bank relieving the taxpayers of the $52 million bond guarantee.
“This has been something that I’ve been working toward since the very first day I became mayor,” Zimmer said last week.
Zimmer had said at various points during the process that the hospital would close on certain dates if the council did not vote a certain way – yet, it kept running. Zimmer said in order to keep the facility alive, she had to ask state officials for advance Charity Care payments.
Other parties speak out
Despite the positive news for the taxpayers of Hoboken, concerns remain from some interested parties, including Virginia Treacy, who represents the nurse’s union JNESO at HUMC.
“The employees bore a terrible emotional and economic brunt,” Treacy said.
As part of the sale, the union will start working without any contract in place, something she finds troubling.
“The stress on the employees has been extraordinary,” Treacy said. “The people that have hung in there and done their jobs day in and day out while this hangs over their head, they deserve a tremendous amount of credit, and I’m proud to represent them.”
Jonathan Metsch, who served on the HMHA, is the former president and chief executive officer of Liberty Health, the operator of Jersey City Medical Center.
“Everyone that the mayor appointed to the HMHA lives in Hoboken, and we all had a dog in the fight,” Metsch said, crediting the authority with successful teamwork.
Tomarazzo, an attorney by profession, said she didn’t know how much work the sale would be for her.
In fact, the members of the HMHA were all unpaid volunteers who worked for over a year on the hospital issue. Many authority members said they spent up to 20 hours per week on the sale.
“I certainly made a time commitment, but so did every member of the Authority and the mayor,” Tomarazzo said. “I never gave up hope. I knew how important it was to get this deal done.”
Tomarazzo said there were many times she thought the deal was dead, including the night the council rejected the HMHA’s plea for $5 million.
Zimmer said she was disappointed that the council voted against that legislation, and said she regrets that the HMHA members came under attack during the sale process.
Now that the hospital is sold, Zimmer said she is looking forward to taking on “more of the mayoral role” in the city.
For a volunteer like Rofsky, who agreed to join the HMHA after introducing himself to Zimmer at the meet-and-greet, he said serving on the authority has been “a very gratifying experience.”
“It was a really good feeling to contribute to the community,” he said. “If you’re part of a community, you have to give as well as receive.”
Ray Smith may be reached at RSmith@hudsonreporter.com