The transfer of power from Bon Secours Health System to the Municipal Hospital Authority is scheduled to take place within a month of the ordinance being passed. The city of Hoboken decided to take over the hospital last year after Bon Secours said it was losing too much money and planned to close it.
"It's a glorious night for Hoboken," said an ecstatic Mayor David Roberts after the municipal courtroom exploded in deafening applause. "Our city would not be our city without this hospital. We're all committed to its success."
Roberts was joined in celebration by Assemblywoman Joan Quigley, who is also the hospital's vice president of external affairs, as well as the facility's Consulting Director/CEO Harvey Holzberg, who will become president of Hudson Healthcare Inc., the private, non-for-profit organization that will run the operations of the hospital once the Authority assumes ownership.
"It's the city's unanimous support that is going to make this work," said Holzberg who also praised the hospital's staff as being the key component to a successful future.
As president of Hudson Healthcare, Holzberg, whose contract does not include benefits such as health insurance and severance pay, is set to receive $400 per hour with annual wages totaling between $468,000 and $780,000 per year.
The City Council's decision comes almost two weeks after the Local Finance Board for the State Department unanimously approved the sale of the bonds.
By guaranteeing the bonds, the City of Hoboken risks an estimated $10 million if the hospital fails, after the Authority liquidates all of its assets.
According to Roberts, the debt if incurred will be spread over a 20-year period, costing the city $600,000 per year.
The proposed 2007 operating budget for the hospital is currently approximated at $129.8 million by the Hospital Authority. For comparison, this is a larger budget than the city's $74 million and school board's $52 million, combined.
Concerns from the public
While most of the 100-plus individuals in the audience Wednesday supported the ordinance, saying it was the only way to ensure a hospital in Hoboken, a sizable minority expressed concern over the city's new role as described in the ordinance.
Hoboken resident Richard Mason, who introduced himself as a supporter of St. Mary, brought with him four large charts that displayed the hospital's projected revenue and expenses over the next four years, which he took directly from the Authority's business plan.
Mason, an attorney who described himself as a "turnaround professional" with two decades of experience with troubled companies, warned that the hospital will barely break even over the next four years.
Questions concerning the fate of the approximately 1,000 individuals currently employed at the hospital, many of whom are Hoboken residents, were also brought up during the public session, such as whether or not employees would receive severance pay, pensions, and health care benefits if the hospital fails.
Following Mason's presentation, Holzberg, who has turned around four hospitals between New York and New Jersey, described the risk to the city as "incredibly small."
Holzberg said, "From everything I know, this should be a successful turnaround."
The Hospital Authority's interim executive director, George Crimmins, said both would be provided for under the current budget.
In closing, Holzberg warned the council, "If you don't guarantee the bonds, than you do guaranty the closing of the hospital. St. Mary's can and will be saved, and I just implore you to give us the opportunity."
Several other residents also spoke out against the ordinance during the public session, including former Hoboken Mayor Steve Cappiello and Mason's wife Elizabeth, prompting several council members to respond passionately on behalf of the ordinance.
"There were members of the community who came to us and said, the risk is too great," said 4th Ward Councilman Christopher Campos. "If the risk is too great for St. Mary Hospital, then how is it that we're urged to bond for $20 million for open space? How is it that members of this community come to us and say, 'We want parks,' but [when it comes to] the health and safety of our community, isn't more at stake?"
Councilwoman-At-Large Terry LaBruno took it a step further alleging that the majority of those who spoke out against the bonds at the meeting were motivated by personal political aspirations.
"If we're going to bond for anything, it's going to be for life," said LaBruno, who, like Campos, alluded to the support shown by some for additional park space rather than bonding for the hospital. "Some of you want to speak for the unions and the oppressed! Where are they? Why aren't they objecting to what we're about to do? And we're about to do it unanimously, you can bet your bottom dollar on that."
Arguably, the must touching moment of the night came when a young man from Weehawken, who suffers from a seizure disorder, thanked the mayor and City Council for saving the hospital which saved his life in the past.
He said it was a big help because its location meant less time for Emergency Medical Technicians to transport him to St. Mary's as opposed to how long it would have taken to take him to Christ Hospital in Jersey City.
The bonds and the projects they'll fund
The bonds, which are being underwritten by NW Financial Group and are currently being marketed to financial firms, will be made available on the secondary market for individual investors in approximately three weeks. The bonds will receive a triple "A" rating, and at some point, the bonds will be offered to bondholders with an exemption from taxes on the profits.
In addition to the bonds, the hospital will receive additional funding from the federal government during 2007 through the federal Disproportionate Share Hospital (DSH) fund in the area of $8 to $9 million, according to Crimmins.
Thirty-three of the $52 million will be used for capital projects that include: $11 million for a brand new emergency room facility, $5.6 million for a new 64-slice CAT Scan, $5 million for laboratory improvements, $1.5 for patient room renovations, and $6 million towards the acquisition of the FAITH Services building at 307 Clinton St. and the Family Practice Clinic at First and Clinton streets.
The remaining bond money will be placed into a reserve fund which will be used toward the initial startup costs required for the first three months of operations, due to the fact that the Hoboken University Medical Center will not receive billing from the patient's insurance companies for between 60 and 90 days after the hospital is under the control of the Authority.
32,000 get emergency services
St. Mary Hospital provides emergency medical services to approximately 32,000 individuals per year, and overall is available to approximately 300,000 residents in northern Hudson County.
The hospital provides uncompensated care for both uninsured and underinsured patients, costing the medical facility 12.7 million annually for the past three years, according to Quigley.
According to Roberts, as of Jan. 10, the city of Hoboken is valued at $8 billion and has a bonding capacity of $240 million. The $52 million in bonds that are being guaranteed will not be applied to the current $78 million bonds that the city has issued itself, but will rather be placed in a separate category.
Michael Mullins can be reached at email@example.com.
"Our city would not be our city without this hospital." - David Roberts