Officials at the once-struggling facility on Willow Avenue say they now have a $10 million surplus after only 10 months in operation, partially due to attracting new doctors who have brought more patients.
In the previous five years, the former owner, Bon Secours Health Services, had reported an average annual loss of approximately $25 million per year.
Such a loss was not a surprise, as many hospitals in the state are struggling, both because they have to compete with private medical centers (such as radiology centers) and because they are not sufficiently compensated for the uninsured and underinsured people they are bound to treat.
Rather than see the city's only hospital close, officials from Hoboken stepped in to save it.
Last February, the City Council, under the direction of the mayor, approved $52 million worth of bonds which were underwritten by the NW Financial Group, which then sold the bonds to independent investors. If the hospital did not turn itself around, and had to sell the property on which it was located to pay back the bond investment, the city would have to make up the difference between what the Hospital Authority received for its property and how much was owed to investors.
The city formed an independent entity known as the Hoboken Municipal Hospital Authority to oversee the new Medical Center. The Authority purchased the medical facility from Bon Secours, debt-free, for only $1.
Harvey Holzberg was brought in to run the hospital. Holzberg had served as president of Robert Wood Johnson University Hospital in New Brunswick and was the former president of Jersey City Medical Center.
The HUMC also established an affiliation with several New Jersey colleges, such as Rutgers and UMDNJ.
Turning it around
The Municipal Hospital Authority has managed to turn the hospital's net income around by $35 million, according to the hospital's chief financial officer, Ron DiVito.
This feat has been achieved through a combination of cutting spending, receiving government subsidies, and increasing patient admittance by a whopping 20 percent over the past 10 months.
According to several HUMC officials, the success story is based largely on the medical facility's ability to attract new physicians and retain existing ones through capital improvements that restored a once-eroding confidence in the facility's financial security.
"In the quality of service they provided and the enthusiasm they showed, every employee was involved in saving this hospital," said Assemblywoman Joan Quigley, who also works full-time as the hospital's vice president of external affairs.
Quigley added, "We're striving to be the best hospital in the state of New Jersey."
Quigley commended the efforts of hospital CEO Holzberg in particular, for what she described as his "genius" in making decisions that secured a future for HUMC.
Many of those at HUMC also praised Mayor David Roberts for having played an instrumental role in securing a future for Hoboken's only hospital.
"The success of this hospital is a testament to what we can accomplish as a community if we marshal our resources and work together," said Roberts last week. "I can't imagine what the impact would have been on the city's economy and community if we had not succeeded in saving our hospital. I'm just honored to have played my part."
How they did it
In 2007, the total revenue for the Hoboken University Medical Center (HUMC) reached approximately $134 million, a sharp increase from the previous year's $94 million.
Of the $134 million in income, $10 million is profit that was earned since the Hospital Authority took over February of 2007.
This represents a $35 million turnaround, since the previous year, Bon Secours had incurred a $25 million debt by the end of the year.
The impressive turnaround was accomplished by a series of steps implemented by The Hoboken Municipal Hospital Authority.
First the Hospital Authority cut spending by $12 million.
According to DiVito, this was accomplished by bringing several services in-house that were previously contracted out at great costs.
The first of these services was information technology [IT]. Previously, Bon Secours had invested in a three-hospital system, which also included Jersey City's Christ Hospital and the former St. Francis Hospital, which is presently in the process of being converted in residential units. The three-hospital system caused the prior vendor to be tasked with operating a much more extensive IT network. Instead, HUMC hired eight employees to work specifically on its IT network, which resulted in much more focused and cost-effective work, according to DiVito.
The second method of cutting costs involved ending contracts with various consulting firms that had been hired by Bon Secours for primarily financial and administrative purposes.
Much like the IT work, the same procedures are now done in-house.
While cutting costs in one area, the Hospital Authority simultaneously increased income in another, applying for and receiving approximately $5.8 million in state subsidies over the past year through the Disproportionate Share Hospital program (DSH). Previously, the funding was unavailable to Bon Secours because it was a profit-making private entity, where as HUMC is entitled to such state subsides because it is a non-for-profit municipal hospital.
Through DSH, the state pays the difference between what the hospital receives from patients with Medicaid as their provider, and the actual bill for their services.
According to DiVito, DSH pays approximately 20 percent of the bill for every Medicaid patient.
Lastly, HUMC was able to increase patient admissions by some 20 percent, accounting for approximately $17 million more in revenue as compared with the previous year of operation, according to the CFO.
Since February, HUMC has had approximately 8,000 patient admissions, and 25,000 additional patients coming through the ER.
In addition to the influx of new doctors who are now referring their patients to HUMC for care, DiVito believes another reason for the increase lies in the hospital's ability to market its newly enhanced services to the public.
Examples include new specialty units in the pediatric department that were added in recent months, and a larger, more enhanced OB/GYN center.
The $10 million surplus generated from this year's revenue will be put into a reserve fund for future years, according to Holzberg.
In the last year alone, 40 new physicians have joined the staff at HUMC, bringing the number of HUMC credentialed physicians to approximately 480 doctors, of which approximately 280 are active in the hospital and the rest are "not-active."
Those who are considered "not-active" are generally specialists or physicians who work primarily out of their own office and do not work out of HUMC directly, yet can refer their patients to the medical facility.
To become an HUMC-credentialed physician, a doctor must possess certain credentials qualifying them to perform medicine at the facility.
Only MRI of its kind
In addition to the capital investments made over the past year, which include ultrasound and mammography equipment as well as a $750,000 high-definition MRI Unit, the only one of its kind in the county, many doctors have also been attracted to HUMC because of the high percentage of paying patients who are admitted to the facility and are either covered by insurance or pay out of pocket.
In HUMC, 88 percent of patients are paying, according to DiVito, who added that in comparison only 50 percent of those treated at The University of Medicine and Dentistry of New Jersey (UMDNJ) pay. The higher percentage of paying patients, the more likely a doctor will be compensated for his or her care to the patient.
Two young doctors speak
Capital improvements and personal monetary incentives weren't the only reasons HUMC appealed to so many new doctors.
Dr. Bianca Chiara, a 29-year-old family practitioner originally from Morris County, decided to become certified with HUMC in the past year after completing her residency at the medical facility and finding it to be a "friendly, family like-environment."
"I had such a good experience in the past three years here. From day one [the physicians] treated residents like colleagues. You felt like you were part of a family. It was an extremely healthy environment to be a part of," said Chiara, who has since relocated to Hoboken so to "continue working for my community."
A similar experience was had by 32-year-old OB/GYN Physician Neal Gressock, an Ohio native. Gressock did his residency in Manhattan's St. Vincent's Hospital, but moved to HUMC this past year.
"It was extremely refreshing coming [to HUMC]. Everyone had the same goals and wanted to do what's best for their patient. It was very different from my experience in New York," said Gressock, who added that many of the doctors he works with are relatively young, which appeals to many of the younger Hobokenites who are new to the city and use the hospital.
He noted, "One problem is that many Hoboken residents end up going into New York City for their care, when many of the doctors here have trained there and worked there before coming out here. It's only a matter of time before we convince residents that we're just as good as the doctors in New York."
In order to further communicate this message to residents, in the coming months, HUMC plans to begin a campaign informing residents of the amount of its doctors who have their roots in New York City, but have found there way to Hoboken.
They intend to dispel the myth that New York doctors are superior to New Jersey ones and encourage more Hobokenites to seek medical treatment in the more convenient, local hospital.
Michael Mullins can be reached at email@example.com. The new ER One example of an investment illustrating the hospital's commitment to the community was seen this past Wednesday in the groundbreaking of the new, $13 million Emergency Room (ER). The state-of-the-art facility, which will be located at the corner of Fourth Street and Willow Avenue, will double the occupancy level of the hospital's current ER, with the capability of admitting 64,000 individuals over the course of the year. The new ER is expected to be completed by mid-2009 and will be 16,000 square feet in area, as compared with the current ER which is only 5,000 feet. Upon completion of the new facility, the current ER will probably be converted into a "low risk catheterization area," which will be used to treat stroke victims in particular, according to the CFO Ron DiVito. Presently, the hospital does not have the facilities to treat stroke victims, who are taken instead to other stroke centers in the area. Forty percent of all admitted patients originate in the hospital's ER, which once enhanced through the new facility, is expected to further increase future revenue. - MM