The struggling Christ Hospital, which filed for Chapter 11 bankruptcy on Feb.6, has $115 million in liabilities and owes money to an estimated 1,000 to 5,000 creditors, according to a document filed with the U.S. Bankruptcy Court.
Other information provided in the filing indicates the scope of the hospital’s financial problems. Despite these problems, however, it appears that Christ does not plan to close and will still pursue a sale to a new owner.
The hospital filed for bankruptcy after a sale agreement to a private health care company fell through two weeks ago.
Meanwhile, the nurses’ union and community groups are trying to keep the pressure on Christ officials to maintain pressure on the hospital open while fulfilling its traditional mission as an urban “safety net” hospital. Several other hospitals in Hudson County have been sold to for-profit owners who have stopped accepting certain insurance providers. For now, Christ remains one of only three non-profit hospitals in Hudson County.
Creditors to be paid?
Christ officials announced the Chapter 11 filing on Feb. 6, the same date reorganization papers were filed in court. The move was widely anticipated since Christ’s Board of Trustees had given President and CEO Peter Kelly authorization to file Chapter 11 just days earlier.
In a statement released Monday, hospital officials stated: “In order to maintain financial stability and to preserve its commitment to its patients, Christ Hospital has filed for Chapter 11 reorganization. This reorganization process will ensure that Christ Hospital will continue to serve the Hudson County community as an acute care facility.”
‘We remain committed, with CHA, to save Christ Hospital.’ – Mark Rabson of JCMC
The hospital had hoped to stave off bankruptcy proceedings or closure by negotiating a quick sale to Prime Healthcare Services, a private company that owns a chain of for-profit hospitals in California. Prime Healthcare had made a commitment to purchase the hospital for $15.7 million in cash and had promised to make $35 million in capital improvements after the sale was approved. According to Kelly, the proposed sale – which Christ and Prime officials hoped would be approved by Dec. 31 – would have stemmed $800,000 in monthly losses at the hospital.
But state agencies, residents, and hospital employees raised doubts about Prime after it was learned that the company was the target of multiple investigations into its medical and business practices. Prime walked away from the deal on Feb. 1.
Now the hospital is trying to keep its doors open while Kelly and the board plan their next move.
A full list of the hospital’s creditors was not included with the bankruptcy filing. Like most large businesses, Christ Hospital has secured and unsecured creditors. Secured creditors are those that have given credit or a loan which is backed up by some type of collateral. Unsecured creditors are those that have offered goods or services that are not backed up by collateral. Typically, in bankruptcy filings, secured creditors – for example, banks – are in a stronger position to be repaid by the debtor than unsecured creditors. When businesses and other entities file Chapter 11 it’s often the unsecured small vendors that won’t be paid.
In what may be a positive and telling sign, Christ’s bankruptcy document notes that the facility “estimates that funds will be available for distribution to unsecured creditors.” This could be interpreted to mean that the hospital still hopes to sell to another company that will agree to absorb its debt.
Christ Hospital has received at least two other sale offers that have been publicly announced. Hudson Hospital Holdco LLC– which already owns the for-profit hospitals Bayonne Medical Center and Hoboken University Medical Center – has offered to buy Christ for $91.6 million.
LibertyHealth System, which owns the non-profit Jersey City Medical Center, has made two offers to buy Christ, the most recent of which was a combined bid with Community Healthcare Associates (CHA) for $104.3 million.
The hospital’s assets total nearly $38 million.
“We remain committed, with CHA, to save Christ Hospital,” said LibertyHealth spokesman Mark Rabson, noting that the bankruptcy does not change LibertyHealth’s interest in Christ.
‘All options on table’
New Jersey Citizen Action, a group of community neighborhood associations that have formed under the umbrella organization Save Christ Hospital, and the nurses’ union – Health Professionals and Allied Employees (HPAE) – believe the hospital can be salvaged despite Chapter 11 and have asked to work with Christ’s board to keep the facility open.
“Peter Kelly has reached out to us and we do, in fact, have a meeting confirmed with him,” said Save Christ Hospital organizer Paul Bellan-Boyer on Thursday. “It looks to me as if all options are still on the table. Anybody who is interested in the hospital is able to talk to the board, and the board is able to consider those offers, or not. It’s possible that an active bankruptcy could bring new potential buyers out…From the community stand point, we’ve never taken a stand for or against any deal. We’ve just tried to stand for the principles and outcomes that would represent a good deal for the community. That’s what we’re still going to try and do when we meet with Peter Kelly.”
NJ Citizen Action, Save Christ Hospital, and HPAE have called on Christ officials to work with the community throughout the reorganization process.
Christ Hospital is being represented by Warren J Martin Jr. of Porzio, Bromberg, and Newman of Morristown.
E-mail E. Assata Wright at email@example.com.