Hoboken Hospital Authority Unanimously Approves Contract With HUMC Holdco LLC

, the Hoboken Municipal Hospital Authority unanimously approved a contract with HUMC Holdco LLC  on Wednesday night, to sell the Hoboken University Medical Center for $90 million.  

The proposed sale would releive the city of its nearly $52 million bond obligation on the hospital. The city bonded and created the hospital authority in 2008 to keep the hospital open, which was then on the verge of bankruptcy.

The passing of Wednesday night's resolution does not mean the sale is finalized. Now that the Hospital Authority has approved the contract, it will go to the State Department of Health for approval. As part of that process there will be public meetings. After the state approves, there can be a closing of the deal, at which point the hospital will change ownership. 

The closing deadline is July 31.

According to Chairwoman of the authority Toni Tomarazzo, the contract with HUMC Holdco fulfills the other major requirements: maintaining the hospital as an acute care facility, guaranteeing the employees' jobs and making sure the quality of the care at the hospital is at the same level as the rest of the county. 

According to a presentation of the contract on Wednesday night HUMC Holdco is promising to run the hospital as a full service acute care facility for seven years.

As far as the employees' are concerned, the contract with HUMC Holdco states that a minimum of 75 percent of the more than 1,000 employees will keep their jobs.

"We needed a firm commitment of the buyers of this hospital," Tomarazzo said, "how many people they would absolutely commit to keeping. That should by no means be construed as a statement that 25 percent of the staff will not be here."

Once the hospital is sold, it's unclear if the new owner will keep Spiros Hatiras as the CEO. Hatiras has been at the hospital for about 20 years and said that he would like to stay. 

The meeting on Wednesday started with a closed session. At one point, yelling could be heard through the closed doors and about 20 minutes into the executive session, Hatiras left the room without any explanation. 

During the public portion of the meeting, several hospital employees expressed their concerns about the contract. One of the hospital's engineers, standing in the back of the room, wondered if his union contract would be acknowledged by the new owners. Susan Kelly, an employee of the hospital for 28 years, worried about her health care and if hospital employees would be covered by the new owner.

Tomarazzo said she believes there will be no change in health coverage for hospital employees and that HUMC Holdco has promised to negotiate with the unions "in good faith." From the audience, one nurse responded to Tomarazzo that "believing and knowing are two different things."

Tomarazzo said also that medicaid and medicare patients would still be fully covered when HUMC Holdco takes over. Tomarazzo said that the new owner will enter into negotiations with the current unions, "as is required by law."

The Hoboken University  Medical Center has lost a total of $45 million since 2008, according to Zulima Farber, from law firm Lowenstein Sandler. Farber gave part of the presentation of the contract between the authority and HUMC Holdco on Wednesday night. Without state funding, the hospital can't function or pay its bills. 

Steve Flemming, a financial consultant at Price Waterhouse Cooper, who was hired by the Authority, explained $90 million amount. 

Of that money, Flemming explained, $51.6 million is to pay off the city's bond obligation on the hospital; 19.2 million will be spent on other assets ("such as accounts payable," Flemming said); and $20.9 in further investments. 

HUMC Holdco is one of eight bidders, Tomarazzo said. Of the initial eight, the Hospital Authority vetted six remaining bids,  The other bidders have not—and will not—be made public. One of the bidders, Geoff Teed of Paradigm Physician Partners in Connecticut, and spoke during Wednesday night's public portion. 

"Why (was there) only one bidder?" Teed asked, "I think that’s a fair question."

Although it's unclear why HUMC was chosen as the finalist, CEO Hatiras said he this was "clearly the leading bid."

"This was the one I would have picked too," he said.