CERTIFICATE OF NEED Department Staff Project Summary, Analysis & Recommendations Transfer of Ownership

Transcription

1 CERTIFICATE OF NEED Department Staff Project Summary, Analysis & Recommendations Transfer of Ownership Name of Facility: Hackettstown Regional CN# FR Medical Center Name of Applicant: AHS Hospital Corporation Total Project Cost: $54,000,000 Location: Hackettstown Equity Contribution: $54,000,000 Service Area: Warren County Applicant s Project Description: This application is for the transfer of ownership of Hackettstown Community Hospital d/b/a (HRMC) to AHS Hospital Corporation (AHS), a New Jersey non-profit corporation whose parent company is Atlantic Health System, Inc. (Atlantic Health). Atlantic Health, through its subsidiary, AHS, would continue to operate and maintain HRMC as an acute care general hospital at the same licensed bed complement and service levels. When the transfer of ownership is completed, the overall acute care bed capacity would remain at 111 beds. Categorically, the licensed bed composition would continue to reflect 93 Medical/Surgical beds, 10 OB/GYN beds, and 8 Adult ICU/CCU beds. The hospital s service complement would include the existing 3 Mixed Operating rooms, 1 Mobile Lithotripter, 1 Linear Accelerator,1 PET/Computerized Tomography scanner combined unit, 1 Fixed Computerized Tomography Scanner, a Sleep Center, 2 Hyperbaric Chambers and Acute Hemodialysis services. HRMC would also continue to operate the Center for Healthier Living at 108 Bilby Road in Hackettstown and the Counseling and Addiction Center at 112 East Avenue in Hackettstown as hospitalbased, off-site ambulatory care facilities. In addition, the hospital would continue its designations as a Community Perinatal Center - Basic and Primary Stroke Center. This transfer would result in HRMC being placed under ownership of AHS, the same nonprofit corporation that owns and operates Morristown Medical Center (Morris County), Overlook Hospital (Union County), Chilton Medical Center (Morris County) and Newton Memorial Hospital (Sussex County). This transfer would strengthen the financial viability of HRMC as a general acute care hospital and improve the quality and scope of services offered. The hospital would continue to serve its community residents and medically indigent population without any disruption in services. Applicant s Justification of Need: This proposed merger would represent not only the coalescence of institutional knowledge, but also the integration of missions, visions and values that focus on achieving a service level of excellence for patients and their families. With both

2 Page 2 institutions sharing the same core values, the consolidation of these two working entities would undoubtedly produce a positive outcome in service delivery. This ownership merger is a conscious effort to adapt, rather than react, to an evolving and uncertain health care environment. The applicant believes that there are many benefits to having these institutions merge. First and foremost would be the benefit to the patient community. AHS s services include Trauma, Heart, Neuroscience, and Pediatrics and the completion of this transaction would make these services more readily available to the patient community served by HRMC. There are also financial and infrastructure benefits such as reduced costs to both institutions by sharing services such as Information Services, Human Resources, Legal and Finance staffing, and Patient Financial Services. Cost savings would also be achieved through Strategic Sourcing, which encompasses all of the supply chain activities such as bulk purchasing, centralized warehousing, as well as consolidation of activities for the mail room, storeroom and print shop. The applicant is confident that this transfer will enhance the delivery of health care services in the region and improve a physician s ability to track their patients as the region benefits from the AHS s information system structure. The applicant sees the merger engendering greater access to inpatient and outpatient services with the implementation of their electronic health care record keeping system for their hospitals. The coordination of services between these hospitals will result in better organized community screenings and programs, as well as clinical trials to reach more segments of the population. In addition, the applicant anticipates that more patients will choose HRMC once it becomes part of Atlantic Health based on its reputation and superior levels of services in areas such as Neurosurgery, Trauma, Cardiac Surgery, and Neonatal Critical Care. The newly formed alliance between AHS and HRMC would have a greater sustainable impact on accessing specialized health care services for the HRMC community and provide for more cost savings opportunities to prepare for addressing the mandates set forth in the Affordable Care Act. AHS intends to increase access at HRMC by working towards adopting new practices to reduce cultural barriers and improve health literacy, making their services more readily available regardless of a patient s ethnicity or orientation. This initiative includes implementation of a health literacy taskforce, communication training for health professionals, educational materials for patients, and the formation of a diversity council to ensure the delivery of quality care for a diverse patient population. The interaction of all these moving parts will produce a more formidable and sustainable hospital. This integration of these parts would be accomplished by greater clinical integration through common platforms such as Electronic Medical Records, disease management through shared evidence-based clinical protocols, and procedures to ensure that episodes of care are delivered in the most efficient and effective manner.

3 Page 3 Applicant s Statement of Compliance with Statutory & Regulatory Requirements: The applicant has stated the following to demonstrate its compliance with the statutory criteria contained in the Health Care Facilities Planning Act, as amended at, N.J.S.A. 26:2H-1 et seq. and N.J.A.C. 8: et seq. as follows: 1. the availability of facilities or services which may serve as alternatives or substitutes: According to the Applicant: The applicant identifies the primary service area for HRMC as consisting of Budd Lake, Hackettstown, Long Valley and Washington. The secondary service area for HRMC includes Andover, Belvidere, Blairstown, Flanders, Great Meadows, Newton, Oxford and Stanhope. There are other hospitals providing similar services to those provided at HRMC that treat residents residing in HRMC s primary and secondary service area. These hospitals are listed in the order of historic market share: Newton Memorial Hospital, Morristown Medical Center, St. Luke s Warren Hospital, St. Clare s Hospital/Denville, St. Clare s Hospital/Dover, Hunterdon Medical Center, Saint Barnabas Medical Center, Overlook Hospital, Hackensack University Medical Center, Robert Wood Johnson University Hospital, Bergen Regional Medical Center, Somerset Medical Center, St. Joseph s Regional Medical Center and UMDNJ. There are also other out-of-state hospitals providing health services for this area, which include Easton Hospital, St. Luke s Hospital/ Bethlehem, Memorial Sloan Kettering Cancer Center, NY Presbyterian Hospital Columbia, and Lehigh Valley Hospital. These hospitals could serve as alternatives or substitutes for HRMC, but Warren County residents would likely experience a substantial reduction in healthcare services if HRMC were to close or significantly downsize. This merger ensures the current level of services available at HRMC remains the same and provides a coordinated network for medically complex cases to be transferred to Morristown Memorial. 2. the need for special equipment and services in the area: According to the Applicant: This proposed transfer of ownership does not involve special equipment or services in the area. The applicant states that all current services would continue to be offered at HRMC and easier access would occur to the specialized services at Morristown Medical Center, which includes Neurosurgical, Trauma, Cardiac Surgery, and Neonatal Critical Care, as well as access to its physicians when the merger is completed for those patients utilizing HRMC.

4 Page 4 3. the adequacy of financial resources and sources of present and future revenues: According to the Applicant: One of the main reasons for this transfer of ownership is to help ensure the financial viability of HRMC. The cost savings associated with this transfer of ownership are expected to result from the implementation of shared services in several departments, including Finance, Human Resources, Information Technology, Patient Financial Services, Legal and Purchasing. This merger is a proactive step on behalf of these hospitals to assure adequate financial resources and revenues are available in anticipation of the reduction of payments from Medicare and Medicaid under the National Health Care Reform Act. The integration of these hospitals will ultimately produce a more cost effective operating environment to deliver the health care services at HRMC. 4. the availability of sufficient manpower in the several professional disciplines: According to the Applicant: Sufficient staffing and manpower in the professional disciplines would need to remain within the same existing ratios in order to provide the same high quality care that both AHS and HRMC demands. The applicant does not expect any difficultly in continuing to employ qualified personnel to staff all of its hospitals. The total number of employees at HRMC as of 4/10/2014 was 878, which includes 507 fulltime, 84 part-time, and 287 per diem. After this transfer of ownership is approved, AHS will employ 98-99% of 878 employees currently employed at HRMC. This would translate into 860 to 869 of the 878 employees continuing employment. 5. will not have an adverse economic or financial impact on the delivery of health care services in the region or statewide and will contribute to the orderly development of adequate and effective health care services: According to the Applicant: In accordance with the general criteria for Certificate of Need approval at N.J.S. A. 26:2H-8, specifically that this will not have an adverse economic or financial impact on the delivery of health care services in the region or statewide, the applicant anticipates that the merger will have the opposite impact; namely that the transfer of ownership will enhance the delivery of health care services in the region and have a positive impact on the economics of the region. This merger will offer the region the opportunity to benefit from the services, clinical excellence and demonstrated quality that AHS would bring to the region. This merger will improve a physician s ability to track their patients as the

5 Page 5 region benefits from AHS s information system structure and provide the patients treated at HRMC with greater access to the specialists on staff at Morristown Medical Center. The applicant envisions that this transfer of ownership would only contribute to the orderly development of adequate and effective health care services. Public Hearing: A public hearing was held at Centenary College s Lackland Center in the Sitnik Theater on June 30, 2014 from 6:00 pm to 8:00 pm. Forty-five people attended the hearing with eighteen commenting on the application. Seventeen speakers were in favor of the application citing the benefits and opportunities associated for a smaller, stand-alone hospital to merge with a larger well established hospital system. All of these commenters believed the approval of this application would greatly benefit HRMC and the population of the area. They emphasized how the merging of these institutions would provide greater access to more complex care and technological advances for HRMC patients as well as how the sharing of services and the investment of capital into HRMC will reduce operational costs. Only one speaker opposed the transfer of ownership of HRMC on the grounds that sufficient public notice of the hearing was not given and the absorption of HRMC into a large conglomerate such as AHS may dehumanize the delivery of care and detract from the traditional community spirit at HRMC. The Department has received a number of letters supporting the application from state, county and local elected government officials, including Senator Michael J. Doherty, Assemblyman John DiMaioof, Warren County Freeholder Edward J. Smith, Mayor Maria Di Giovanni of the Town of Hackettstown, Mayor Robert Greenbaum of the Township of Mount Olive, Mayor Betty Schultheis of the Township of Allamuchy and Mayor Timothy C. McDonough of the Township of Hope. Additional letters of support were filed by Warren County Department of Human Services, Karen Ann Quinlan Hospice, House of the Good Shepherd, Gerrity Baker Williams Inc. Insurance, Heath Village, Nisivoccia LLP, Centenary College, SASCO Insurance Services, Inc., Skylands Orthopaedics, Zufall Health Center, Warren County Community College, Medical staff at Hackensack University Regional Medical Center and WRNJ Radio Station. Department Staff Analysis: Department staff concluded that the applicant, AHS, has adequately documented compliance with the applicable certificate of need rules (N.J.A.C. 8: et, seq.) and general statutory standards (N.J.S.A. 26:2H-1 et seq.). For the purposes of this review, this application is considered a transfer of ownership of a licensed facility currently offering health care services and not a reduction, elimination, or relocation of health care services. Department staff reviewed the applicant s certificate of need and

6 Page 6 determined that the applicant s rationale to transfer the ownership of HRMC is a realistic assessment of HRMC s service area and the health care services environment for Warren County and the region. Considering that once transferred, AHS is committing to operate HRMC not only at the same bed capacity levels but also with the same outpatient service levels, the transfer proposed by AHS s governing authority and management appears to be a feasible option for ensuring that HRMC continues to provide quality health care services to the community. Overall operating costs and reduced patient volume at HRMC account for HRMC s decision to transfer their ownership to AHS. For HRMC to continue operating as a small scale independent community hospital would exert significant financial pressure on their limited resources increasing their budgeted losses from operations, possibly leading to either a significant reduction of community health services or an unplanned closure. The application indicates that the focus of this transfer of ownership is to strengthen and improve the existing health care delivery system at HRMC. AHS states that its highest priority is improving the quality and availability of health care services to the patient community at HRMC. AHS intends to direct its efforts to provide greater access to inpatient and outpatient care. For example, AHS will invest monies in the development and implementation of an electronic health record system at HRMC, a strategic plan to improve patient quality and safety through structured, evidence based measurement process and to provide opportunities for participation in research and clinical trials. AHS s business model for HRMC includes an emphasis on shared services not limited to information technology but also human resources management, financial management, patient billing services and purchasing. HRMC would benefit from the experience gained at AHS in these functional areas as well as their wide array of clinical expertise in such areas as Trauma, Heart, Neuroscience and Pediatrics. The merger of these two hospitals would create a more complete and structured system for Atlantic Health with a greater outreach for both physicians and patients. Patients at HRMC would be able to access the specialists at Atlantic Health s facilities more expeditiously and be transferred to their facilities with fewer administrative barriers. The objective of this transfer is to promote a higher standard of care at HRMC and reduce their operating costs without any disruption in the continuity of services for patient care. AHS states that it intends to accomplish these objectives by directing its efforts through operational support, capital and enhanced organizational approaches to the delivery of care, and name recognition for its excellence in patient care. The primary purpose of this transfer is not necessarily to increase volume at HRMC, but to build a more stable operational environment for all the hospitals involved to administer health care and assure their collective futures.

7 Page 7 Table 1 - Licensed Beds 2008 Hackettstown Beds OccRt 49.40% 63.77% 60.18% 51.47% ADC Hackettstown Beds OccRt 48.34% 55.92% 65.86% 50.29% ADC Hackettstown Beds OccRt 48.57% 51.12% 61.23% 49.71% ADC Hackettstown Beds OccRt 48.94% 35.92% 63.66% 48.83% ADC

8 Page Hackettstown Beds OccRt 44.55% 34.15% 62.98% 44.94% ADC Hackettstown Beds OccRt 40.90% 34.36% 55.24% 41.34% ADC Source: Department s Health Care Financing Systems Summary of Inpatient Utilization (B-2) Table 2 Maintained Beds 2008 Hackettstown Beds OccRt 65.63% 27.73% 60.18% 56.57% ADC Hackettstown Beds OccRt 64.22% 24.31% 65.86% 55.26% ADC Hackettstown Beds OccRt 64.53% 22.23% 61.23% 54.63% ADC

9 Page Hackettstown Beds OccRt 65.03% 15.62% 63.66% 53.67% ADC Hackettstown Beds OccRt 57.54% 14.85% 62.98% 48.43% ADC Hackettstown Beds OccRt 52.83% 14.94% 55.24% 44.55% ADC Source: Department s Health Care Financing Systems Summary of Inpatient Utilization (B-2) A review of the annual occupancy rate and average daily census for combined service categories (Medical/Surgical, OB/GYN, and ICU/CCU) for HRMC shows a gradual steady decline for both of these indicators. The number of licensed beds has remained consistent from 2008 to 2013 at 111, with the annual occupancy rate moving downward respectively from 51.47% to 41.34% for these years. The number of maintained beds has remained consistent at 101 from 2008 up to 2012 when the bed total increased to 103, which continued for the entire year of The annual occupancy rate for maintained beds in 2008 was at 56.57%; this rate moved lower in 2013 to 44.55%. The average daily census (ADC) for both maintained and licensed beds followed the same course declining from in 2008 to in During the period 2008 to 2013, the difference in the combined annual occupancy rates between licensed and maintained beds was insignificant. AHS does not expect these figures to fluctuate to any great extent in the near future but does anticipate that the application of their business model will attract patients presently using out of state facilities for their health care. By category, the annual occupancy rates and average daily census numbers for maintained beds at HRMC have declined for the 23 OB/GYN and 8 ICU beds. In 2008, OB/GYN beds were at 27.73% with an average daily census of 6.38 and ICU/CCU had

10 Page 10 an annual occupancy rate of 60.18% with an average daily census of With respect to the 23 OB/GYN beds, the applicant explains in response to completeness question number 15 that it maintains nine of these ten licensed beds, as well as 19 licensed medical/surgical beds, for post-partum care. The information provided by the B-2 data is being used for the purpose of this project summary; however, Department records do not reflect the approval for these additional temporary beds. For the most recent year of 2013, OB/GYN beds were at % with an average daily census of 3.44, and ICU/CCU beds had an annual occupancy rate of 55.24% with an average daily census of The number of beds for both these categories remained unchanged during these years. The B-2 data clearly shows significant patient volume reductions in each of these bed categories. With regard to maintained medical/surgical beds, from 2008 to 2011, the number of maintained beds remained at 70. In 2008, these medical/surgical beds had an occupancy rate of 65.63% with an average daily census of These indicators changed very little when compared to 2011, when the annual occupancy rate fell slightly to 65.03% and ADC declined to There was relatively little change between these years. In 2012, the number of maintained medical/surgical beds increased to 72, driving down the annual occupancy rate to 57.54%, while the ADC fell to This continued into 2013, when the annual occupancy rate dropped to 52.83% and the ADC fell to The increase in maintained medical/surgical beds does not appear to have had any substantive positive impact on the utilization of this service since the average daily census declined from a five year high of in 2008 to in When examining the annual occupancy rate and ADC for the 93 licensed medical/ surgical beds, from 2008 to 2013, there was a continued movement downward during this five-year reporting period. The annual occupancy rate and average daily census for medical surgical beds in 2008 were at their five-year high of 49.40% and These figures gradually descended with the annual occupancy rate falling to 40.90% and ADC declining to Based on these numbers, the projected trend illustrates a downward pattern for this bed category if the operating environment remains constant. The foundation for AHS s transfer of ownership proposal targets reducing cost while improving patient care. AHS acknowledges the low patient volumes at HRMC but believes that the application of its health care delivery model would rebuild and strengthen HRMC from both an operational and quality perspective. AHS is hopeful that working in conjunction with their service line models would return all of HRMC s services to more viable states. Through affiliations with AHS and its designated Children s Hospital, HRMC patients will have access to programs in various diversified medical specialties across the continuum of care to best align patients with inpatient and outpatient services on both campuses. This effort combined with planned and ongoing wellness and prevention programs should have a positive effect on the future delivery and utilization of care at HRMC. AHS s business models integrate HRMC into the Atlantic Health System providing HRMC with opportunity to become a stronger and more responsive heath care provider to its patient community.

11 Page 11 After carefully reviewing the data and examining the mutual benefits of this transfer of ownership of HRMC to AHS, Department Staff believes that the decision to transfer ownership is in the best interest of the residents in the hospital s service area. This transfer, as presented to the Department, would not result in any unplanned reduction of services or disruption to the area s healthcare delivery system. The execution of this transfer is not expected to result in any regional disruptions in the delivery of health care services. Staff does not believe this transfer would significantly affect other hospitals or create access problems since AHS is committed to serving the same population as its predecessor. Department Staff is satisfied that the health status of the patients in this geographic area would not be compromised based on the completion of this transfer. Adequacy of financial resources and sources of present and future revenues According to audited financial statements for the period ending 12/31/2013 provided by the hospital to the New Jersey Health Care Facilities Financing Authority (NJHCFFA), Atlantic Health System reported an excess of revenues over expenses of $70,446,000, which translates to a profit margin of 4.3%. Unrestricted cash, including boarddesignated funds as of 12/31/13 was $816,447,000, which translates to about 200 days cash on hand. For the same period, showed a deficit of revenues over expenses of $1,141,000 (negative 1.29 profit margin) and cash of $33,788,000 (153 days). The application does not indicate any significant health care staff reduction or alteration of professional contracts. It does imply that as a result of the implementation of their shared services approach, there may be a staff reduction in support areas such as human resources and patient financial services. As noted above, the applicant is to maintain the facility as a general hospital at the same licensed bed complement and service levels. The Department also notes that the applicant disclosed no plans to change the existing contracts that currently has with commercial insurers. Staff Recommendations: Based on this documentation of compliance with regulatory and statutory criteria, Department staff recommends approving the transfer of ownership of HRMC for the following reasons and with the conditions noted below:

12 Page 12 Reasons: 1. As a result of the merger with AHS, the financial conditions at HRMC would be strengthened since their operating costs would be reduced through the implementation of shared service programs for human resources management, financial management, patient billing services and purchasing, as well as the development of electronic patient records and disease management improvement programs. This would prevent future financial risks resulting in potential problems for HRMC that could possibly lead to an unplanned closure or significant reduction of services, or bankruptcy. 2. Both the applicant and HRMC would benefit from the clinical relationships established and the development of a more coordinated patient referral network as the health care services at Chilton Medical Center, Newton Memorial Hospital, Overlook Hospital and Morristown Medical Center would be offered under the same administration. The applicant s business model and marketing strategies for HRMC could stimulate an increase in patient volume for their services and result in greater utilization of their medical/surgical beds. The applicant plans to implement the same principles used successfully at its other acquired hospitals, Newton Memorial Hospital in 2011 and Chilton Medical Center in 2013, to rebuild and modernize the infrastructure and services at HRMC. 3. This transfer of ownership would be accomplished without any disruption in the scope or level of services being offered at HRMC for the private pay, insured and uninsured populations since the licensed inpatient and outpatient services would remain the same and the commercial contracts with insurers would also be relatively unchanged. It is the applicant s intent to have HRMC remain as a participating provider with all of their current payers. The applicant is confident that its established reputation in the health care field and clinical expertise will bring forth more growth at the hospital by attracting patients who currently are seeking treatment and care at out-of-state hospitals. 4. The transfer of ownership of HRMC to AHS would not adversely impact any of the neighboring hospitals since the applicant is to maintain HRMC as a general hospital with the same licensed bed complement and service levels. The applicant does not indicate any plan to establish new inpatient services. Data does not exist to suggest that this transfer would change HRMC s relationship with the other regional hospitals or adversely impact the healthcare status of the community. 5. The applicant agrees to comply with the Department s general transfer of

13 Page 13 ownership criteria: there is a willing buyer and seller; the buyer has presented a financially feasible project; and the buyer does not have any identifiable track record violations sufficiently serious to warrant denial of the application. Conditions: Based on this documentation of compliance with regulatory and statutory criteria, Department staff recommends approving the transfer of ownership of HRMC to AHS with the following conditions: 1. The applicant completes the Office of Attorney General Community Health Care Assets Protection Act, N.J.S.A. 26:2H-7.10 et seq., review for the proposed transfer of the assets of HRMC to AHS. 2. The applicant shall file a licensing application with the Department s Division of Certificate of Need and Licensing (the Division) to execute the transfer of the ownership of HRMC s license to AHS. 3. The applicant shall notify the Department s Division in writing of specifically who is responsible for the safekeeping and accessibility of all HRMC patients medical records (both active and stored) in accordance with N.J.S.A. 8: et. seq. and N.J.A.C. 8:43G The applicant, AHS, agrees to retain substantially all of the current 878 employees at HRMC. AHS will employ 98-99% of HRMC s current employees, translating into 860 to 869 of the 878 employees. Six months after licensure, AHS shall document to the Division the number of employees retained and provide the rationale for any workforce reductions. 5. For at least five years, AHS shall operate HRMC as a general hospital, in compliance with all regulatory requirements. This condition shall be imposed as a contractual condition of any subsequent sale or transfer, subject to appropriate regulatory or legal review, by AHS within the fiveyear period. 6. For at least five years, AHS shall continue all clinical services and community health programs currently offered at HRMC. Any changes in this commitment involving either a reduction of services, relocation out of HRMC s current service area, or elimination of clinical services or community health programs offered by HRMC s former ownership shall require prior written approval from the Department and shall be subject to all applicable statutory and regulatory requirements.

14 Page AHS shall continue compliance with N.J.A.C. 8:43G-5.21(a), which requires that all hospitals shall provide, on a regular and continuing basis, out-patient and preventive services, including clinical services for medically indigent patients, for those services provided on an in-patient basis. Documentation of compliance shall be submitted within 30 days of the issuance of the license and quarterly thereafter for a period of five years. 8. In accordance with N.J.S.A. 26:2H and N.J.A.C. 8:43G-5.2(c), AHS shall not only comply with federal EMTALA requirements, but also provide care for all patients who present themselves at HRMC without regard to their ability to pay or payment source. 9. AHS shall provide care in accordance with N.J.S.A. 26:2H and N.J.A.C. 8:43G-5.2(c), which shall not be limited to, nor be substantially less than, the amount of charity care provided historically by HRMC. 10. AHS shall establish a functioning Board of Directors for the hospital responsible for implementing hospital-wide policy, adopting bylaws, maintaining quality of care, and providing institutional management and planning consistent with the AHS organizational structure. This Board shall maintain suitable representation of the residing population of HRMC s service area who are neither employees of, nor related to employees of, any parent, subsidiary corporation or corporate affiliate. Annual notice shall be made to the Department of this Board s roster, along with any policies governing Board composition, governance authority and Board appointments. 11. Within 30 days of licensing, AHS shall provide the Department with an organizational chart of HRMC and each service that shows lines of authority, responsibility, and communication between Atlantic Health and hospital management and board. 12. AHS shall submit an annual report to the Department, for the initial five years following the transfer of ownership, or upon request, detailing: a. The investments it has made during the previous year at the hospital. Such report shall also include a detailed annual accounting of any long or short term debt or other liabilities incurred on the hospital s behalf and reflected on the HRMC balance sheet; b. The transfer of funds from the hospital to any parent, subsidiary corporation, or corporate affiliate and shall indicate the amount

15 Page 15 of funds transferred. Transfer of funds shall include, but not be limited to, assessments for corporate services, transfers of cash and investment balances to centrally controlled accounts, management fees, capital assessments, and/or special onetime assessments for any purpose; and c. All financial data and measures required pursuant to N.J.A.C. 8:31B and financial indicators monthly reporting. 13. Within 15 business days of approval of this application, AHS shall provide a report to the Division detailing the communication plan to HRMC staff and to the community, including but not limited to elected officials, clinical practitioners, and EMS providers, concerning the approval of the transfer of license and the availability of fully-integrated and comprehensive health services. This shall include reference to the outreach plan referenced in Condition 14 below. 14. AHS shall hold an annual meeting for HRMC pursuant to N.J.S.A. 26:2H and develop mechanisms for the meeting that address the following: a. An opportunity for members of the local community to present their concerns to AHS with respect to HRMC regarding local health care needs and hospital operations, and a procedure on how those concerns will be addressed by the hospital; and b. A method for AHS to publicly respond to the concerns expressed by community members at the annual public board meeting. AHS shall develop these methods within 90 days of approval of this application and share them with the Division. 15. An outreach plan shall be placed into effect to ensure that all residents of the hospital service area, especially the medically indigent, have access to the available services at the location. A self-evaluation of this effort shall be conducted on an annual basis for five years after licensure to measure its effectiveness. This evaluation shall contain any expenditure for activities, including but not limited to, outreach, community programs, and health professional education. The evaluation shall be submitted to the Department within 20 business days after each year of licensure concludes and presented to the public at the hospital s annual public meeting. 16. After the transfer of HRMC is implemented:

16 Page 16 a. AHS shall use its commercially reasonable best efforts to negotiate in good faith for in-network HMO and commercial insurance contracts, with commercially reasonable rates based on the rates that HMOs and commercial insurance companies pay to similarly situated in-network hospitals in the northern New Jersey region. b. AHS shall convene periodic meetings with the Department and the Department of Banking and Insurance (DOBI) to review and evaluate all issues arising in contract negotiations within the first year of licensure, and provide written documentation to the Department on a monthly basis during that first year. This documentation shall include, but not be limited to, numbers and results of all telephone calls, correspondence and meetings with existing HMO and commercial insurance carriers, including all such follow-up telephone calls, correspondence and meetings. At a minimum, AHS shall have monthly contact with the existing HMO and commercial insurers. If the existing HMO and commercial insurers fail to respond to requests for negotiations, then AHS shall notify the Department and DOBI to request assistance. c. Within 10 days of licensure, AHS shall post on the hospital s website the status of all insurance contracts related to patient care between the hospital and insurance plans, including all insurance plans with which HRMC contracted at the time of submission of this CN application, February AHS shall also provide notices to patients concerning pricing and charges related to coverage during termination of plans. d. Within the first year of licensure, AHS shall notify the Department of the status of notices to terminate any HMO or commercial insurance contract that will expand out-of-network service coverage. AHS shall meet with representatives from the Department and DOBI to discuss the intent to terminate such contract, willingness to enter into mediation, and shall document how it will provide notice to patients and providers, as well as why such action will not restrict access to health care. e. For at least five years after licensure, AHS shall report annually to the Department on the hospital s payer mix and the number and percent of total hospital admissions that came through the emergency department.

17 Page In accordance with the provisions of N.J.S.A. 26:2H-18.59h, AHS shall offer to its employees who were affected by the transfer, health insurance coverage at substantially equivalent levels, terms and conditions to those that were offered to the employees prior to the transfer. This condition does not prohibit good faith contract negotiations in the future. 18. AHS shall identify a single point of contact to report to the Division concerning the status of all of the conditions referenced within the timeframes noted in the conditions. 19. All the above conditions shall also apply to any successor organization to AHS who acquires HRMC within five years from the date of the CN approval.