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: CN# Name of Applicant: NJMHMC, LLC Total Project Cost: $12.2 million Location: County: Secaucus Hudson County Applicant s Project Description: This application is for the transfer of ownership of Center (MHMC or Hospital) from MHA, LLC (d/b/a Center), a New Jersey limited liability corporation, to NJMHMC, LLC (NJMHMC or Applicant), a New Jersey limited liability corporation. NJMHMC would continue to operate and maintain the facility as an acute care general hospital at the same licensed bed complement and service levels previously provided at MHMC. NJMHMC, the proposed owner and operator of MHMC, is owned by the following individuals: Yan Moshe 99% Margarita Moshe 1% Additionally, Mr. Moshe owns and operates two surgical centers in New Jersey. MHMC is located at 55 Meadowlands Parkway, Secaucus, New Jersey, in Hudson County. It has a Community Perinatal Center Intermediate Designation, and is licensed to operate 204 acute care beds. Categorically, the bed composition reflects 138 Medical/Surgical beds, 14 Adult ICU/CCU beds, 22 OB/GYN beds, 26 Pediatric beds, and four (4) Neonatal Intermediate Care Bassinets. The Hospital s licensed service complement includes five (5) Mixed Use Operating Rooms (ORs), one (1) Cystoscopy Suite, Acute Hemodialysis Service, one (1) Sleep Center Service, one (1) Magnetic Resonance Imager (MRI), and one (1) Computerized Tomography (CT) Scanner, as well as out-patient services. There are no (0) hospital-based off-site facilities listed on the current license. According to the Applicant, the transfer of ownership will provide an opportunity for NJMHMC to revitalize MHMC s services and financial status. NJMHMC has committed to investing a minimum of $3 million in facility and equipment upgrades within the first

2 Page 2 60 months of ownership. NJMHMC, with the implementation of short and long-term business strategies, states that it will improve performance, generate additional patient volumes, and improve the patient experience all of which will result in better margins without impacting negatively on patient care. Applicant s Justification of Need: The Applicant states that [t]he proposed transfer of ownership, as opposed to closure of MHMC, will preserve appropriate access to health care services for the community, including the medically indigent and medically underserved population. Additionally, the Applicant states that [d]enial of the CN transfer of ownership application would adversely affect the medically indigent and underinsured because the hospital is a major provider of emergency and urgent care for those populations. According to the Applicant, it was decided MHMC would explore any interest that may exist in the marketplace for the potential sale of the facility. Negotiations commenced with NJMHMC based on its high level of interest and its owner s status as a local organization. NJMHMC states that it is committed to providing access to all patients regardless of their ability to pay or their payor source. The Applicant states that it is committed to implementing several initiatives that are designed to stabilize and/or grow admissions at the Hospital and allow NJMHMC to meet the healthcare needs of the community for years to come as follows: 1. MHMC has negotiated a Non-Irrevocable Letter of Intent (LOI) with the developers of the American Dream Mall complex to provide certain healthcare services as well as providing a network for the employees of the retail stores that will occupy the mall. This LOI and its terms are part of the assets that will be acquired. 2. NJMHMC will recruit additional primary care physicians, which will aid in increasing the utilization of medical services as well as increase surgical services referrals. 3. NJMHMC will work to develop appropriate in-network strategies with managed care and commercial insurance carriers to increase MHMC s utilization especially since the hospital will be one of two remaining in-network providers in Hudson County for a major carrier. 4. The in-network strategy will also serve to increase out-patient private referral volumes for Lab and Radiology Services. 5. NJMHMC will develop a relationship with the North Bergen FQHC to provide OB services for their clients.

3 Page 3 According to the Applicant, its business strategy to enhance the functional and operational efficiencies at the Hospital does not call for establishing any new inpatient services or duplicating existing neighboring hospital services, so the existing hospitals should not be adversely affected. 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.: 1. The availability of facilities or services which may serve as alternatives or substitutes: According to the Applicant: The Applicant identifies other area hospitals in the region as follows: CarePoint Health Bayonne Medical Center; Christ Hospital; Jersey City Medical Center; Palisades Medical Center; and Hoboken University Medical Center. The application provides distance and travel times to each of these hospitals from MHMC. See Table 3 on p. 9_of these Recommendations, entitled Distance from Meadowlands Hospital to Area Hospitals. Even with alternative facilities in the primary service area, the Applicant notes, residents of the service area would likely experience limitations on access in health care services if MHMC were to close or significantly downsize its out-patient services. The Applicant recognizes the need for MHMC to continue operating as a general hospital and has committed to operating it with no current plan to downsize services or reduce availability to any service currently provided at the Hospital. Both MHA and NJMHMC believe the successful completion of this transfer of ownership will preserve the current level of health care services in the area. 2. The need for special equipment and services in the area: According to the Applicant: The Applicant states that the need for special equipment and services within the area would be met because NJMHMC intends to continue to offer the same services, to the extent possible, that are currently licensed at the Hospital, and all equipment and services necessary to operate the Hospital are specified in the

4 Page 4 asset purchase agreement. Any NJMHMC future adjustments in services will be based on an assessment of the health care needs of the region with expansion of identified gaps in service and elimination of duplicative services. 3. The adequacy of financial resources and sources of present and future revenues: According to the Applicant: The Applicant states that the source of funds to finance the $12.2 million purchase price for the purchase of MHMC is the Applicant s available funds ($5 million) and loans ($7.2 million). According to Section 2.5 of the Asset Purchase Agreement, the $7.2 million loan is being given to the Applicant by MHA in exchange for a promissory note from NJMHMC. The Department notes that MHA has not submitted audited annual financial statements for the last three years, so the Department has limited information to assess the loan. However, reviewing the overall financial adequacy including various net assets, the applicant s assumption of risk is acknowledged. In responses to completeness questions, the Applicant stated that it has $9.3 million in liquidity. The Applicant has demonstrated that its cash on hand, combined with a working capital line of credit, will be sufficient to meet the purchase price and future operational requirements in full compliance with all regulatory criteria. 4. The availability of sufficient manpower in the several professional disciplines: According to the Applicant: The Applicant has committed to hiring substantially all individuals who are employed by MHMC at the time of the closing of the transfer. Additionally, the Applicant states that [n]o change in the existing contracts with professional staff is anticipated at this time. 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: Applicant states that there will be no negative impact on consumer access, including indigent and medically underserved residents of the service area. NJMHMC seeks to continue operating MHMC as a general acute care hospital

5 Page 5 and to continue the level of services currently in place at the Hospital. NJMHMC indicates that the transfer of ownership will not have any adverse economic or financial impact on the delivery of health care services in the region or statewide because of its commitment to continue operating MHMC as a general hospital in its current location and will continue its current complement of services. Public Hearing: A public hearing was held on October 19, 2017, from 6:10 pm to 7:10 pm at the Holiday Inn, 300 Plaza Drive, Meadowlands Rooms 1-3, Secaucus, NJ. Approximately 35 people in total attended at least part of the hearing, with 13 people speaking, including representatives of the town fire and police departments. Of the 13 people who spoke, 12 spoke in favor of the CN application for the transfer, noting that the area needed an acute care hospital and all of its essential services. Many of these 12 speakers had been patients at the Hospital and recounted how convenient the Hospital is compared to others, and the wonderful care received there. The thirteenth speaker, a representative of the Health Professionals and Allied Employees (HPAE) union, argued that the Department of Health (Department) should not have deemed the application complete because the Hospital s current owner had not filed with the Department the required annual audited financial statements for fiscal years Thus, according to HPAE, neither the Department nor the buyer had the necessary financial information to make a completeness determination. The representative suggested that if the application is permitted to move forward in the process, a number of conditions be added to any possible approval. These conditions are similar to those imposed on other hospital transfers and are also included in the staff approval recommendations for the Meadowlands application. Track Record: The Department analyzed the New Jersey track records for Excel Surgery Center, LLC and HealthPlus Surgery Center LLC in accordance with factors set forth at N.J.A.C. 8: , and the Department staff identified no track record violations sufficiently serious to warrant denial of the application. Department Staff Analysis: Department staff has concluded that the Applicant 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.

6 Page 6 Department staff reviewed the Applicant s Certificate of Need application and determined that the Applicant s rationale to transfer the ownership of MHMC is a realistic assessment of the Secaucus service area and the health care services environment for Hudson County. Considering that once transferred, NJMHMC is committed to operate MHMC at the same bed and service capacity levels while maintaining all of the Hospital s current employees and the same contract agreements that are currently in place, the proposed transfer appears to be a feasible option for ensuring that MHMC continues to provide health care services to the community and to maintain its financial viability. According to the application, the transfer of its assets to NJMHMC will strengthen MHMC and will allow it to be in a position to provide the health care service needs of the residents of Hudson County in the most optimal manner. NJMHMC has committed to provide the necessary infusion of capital to enhance the functional and operational efficiencies at MHMC. In 2013, the overall occupancy rate for the 200 licensed beds at MHMC, which included the service complements of medical/surgical, OB/GYN, Pediatrics and ICU/CCU was 19.1%, with an average daily census (ADC) of 42. This same occupancy rate declined to 13.1%, with an ADC of 26, in Categorically, the three licensed bed services that showed a significant decrease in their annual occupancy rates and ADC were medical/surgical, OB/GYN, and Pediatric beds. The annual occupancy rate for the 138 medical/surgical beds in 2013 was 19.0%, with an ADC of 26. In 2016, the medical/surgical bed occupancy rate fell to 15.0%, with an ADC of 16. The occupancy rate for the 22 OB/GYN beds in 2013 was at 24.8%, with an ADC of 5, which fell to 8.8% in 2016, with an ADC of 2. Pediatrics was at 14.0% with an ADC of 4 in 2013, dropping to 4.2%, with an ADC of 1.6 for The remaining inventory of licensed beds consists of 14 ICU/CCU, whose occupancy rate was at 20.6% in 2013, and 17.1% in The trend at MHMC, demonstrates a consistent decline in the utilization of all licensed beds over the next three-year period. Please refer to Table 1 below.

7 Page 7 Table 1 Licensed Beds 2013 MHMC Beds OccRt 19.02% 24.84% 13.95% 20.61% 19.11% ADC MHMC Beds OccRt 18.73% 14.35% 8.02% 17.12% 16.74% ADC MHMC Beds OccRt 19.19% 9.74% 5.05% 18.96% 16.30% ADC MHMC Beds OccRt 14.96% 8.79% 4.17% 18.10% 13.10% ADC Source: Department s Health Care Financing Systems Summary of Inpatient Utilization (B-2) The B-2 data pertaining to maintained beds at MHMC during the 2013 to 2016 period shows the total number of operating beds for each of these years was approximately 99 beds ( beds maintained) which is 101 beds below its licensed capacity of 200. Of the four bed categories, medical/surgical dropped from 47 maintained beds in 2013 to 39 maintained beds in 2015 and 2016, a difference of 99 beds from licensed beds. Reported B-2 data shows a difference of less than 5 maintained beds versus licensed beds for OB/GYN and Pediatrics. All 14 ICU/CCU beds were maintained for the threeyear period. Although the number of OB/GYN beds remained consistent, the occupancy rate decreased from 26.66% in 2013 to 8.79% in A similar drop is noted in Pediatrics. The maintained beds remained consistent, while the occupancy rate decreased from 18.1% in 2013 to 4.3% in Please refer to Table 2.

8 Page 8 Table 2 Maintained Beds 2013 MHMC Beds OccRt 55.85% 26.66% 17.69% 20.61% 37.48% ADC MHMC Beds OccRt 63.42% 15.40% 9.93% 17.12% 34.79% ADC MHMC Beds OccRt 67.91% 9.74% 5.97% 18.96% 33.60% ADC MHMC Beds OccRt 52.93% 8.79% 4.43% 18.10% 26.33% ADC Source: Department s Health Care Financing Systems Summary of Inpatient Utilization (B-2) The Applicant has acknowledged that there are other general hospitals providing services in MHMC s service area and, as noted above, has committed to the continued operation of the Hospital as it currently operates with no changes in services, and to continue to serve all area residents, including indigent patients, without any disruption in the delivery of health care services. Department staff notes that there are five hospitals in the Meadowlands Hospital service area. Please refer to Table 3, which reflects drive times and driving miles for each from MHMC.

9 Page 9 Table 3 Distance from Meadowlands Hospital to Area Hospitals Hospitals Hudson County - Bayonne Medical Center 29 East 29 th Street Bayonne NJ Christ Hospital 176 Palisade Ave Jersey City NJ RWJBarnabas Health Jersey City Medical Center 355 Grand Street Jersey City NJ Hackensack Meridian Health Palisades Medical Center 7600 River Road North Bergen NJ Hoboken University Medical Center 308 Willow Ave Hoboken NJ Essex County RWJBarnabas Health Clara Maass Medical Center One Clara Maass Drive Belleville, NJ East Orange General Hospital 300 Central Ave East Orange, NJ Hackensack University Medical Center Mountainside Bay and Highland Ave Montclair, NJ University Hospital 150 Bergen Street Newark, NJ Saint Michael s Medical Center 111 Central Ave Newark, NJ Bergen County Hackensack University Medical Center 30 Prospect Ave Hackensack, NJ Holy Name Medical Center 718 Teaneck Road Teaneck, NJ Distance from Meadowlands Hospital Travel Time (minutes) miles miles miles miles miles miles miles miles miles miles miles miles 18 Source: Application/Map Quest, Essex and Bergen County facilities within comparable distance added by DOH Staff

10 Page 10 After carefully reviewing the data, Department staff believes that this transfer of ownership of MHMC to NJMHMC will not result in any negative impact on the community or patients that the Hospital has historically served, or on other area hospitals. This transfer, the only option presented to the Department, would be the least disruptive to the area s health care delivery system at this time, although the Department realizes that in the future, NJMHMC may approach the Department with requests to modify services. Department staff is satisfied that the Applicant has documented proposals to increase the utilization of existing resources and continue to operate MHMC in full compliance with all licensing and CN requirements. Department staff believes the Applicant s assumptions for future volume increases are contingent upon successful implementation of NJMHMC s strategic initiatives. These initiatives include the retention of key senior executives and department managers as well as innovative approaches to recruiting additional primary care physicians, developing in-network strategies with insurers, aggressive advertising, and community outreach programs. NJMHMC believes the result of the successful implementation of the aforementioned strategies will generate an additional 1,847 medical/surgical admissions, 540 OB patients and deliveries and an equal number of emergency room visits. Thus, Department staff finds the NJMHMC documentation of their strategy to revitalize the Hospital could strengthen the patient volume at MHMC and improve the future fiscal outlook.

11 Page 11 Table 4 Center Summary of Utilization Statistics for 2013, 2014, 2015 and 2016 Med/ Surg Obstetrics & OB/GYN Pediatrics ICU / CCU ER Normal Newborn Annual 2013 Annual 2014 Annual 2015 Annual 2016 Lic. Beds Adms. 2,446 2,464 2,216 2,027 Pat. Days 9,581 9,433 9,667 7,535 Occup.Rate Lic. Beds Adms Pat. Days 1,995 1, Occup.Rate Lic. Beds Adms Pat. Days 1, Occup.Rate Lic. Beds Adms Pat. Days 1, Occup.Rate Visits 19,304 18,408 17,457 15,621 Adms ,744 2,508 1,940 Births in Hosp Pt Days 1,674 1, Clinic Visits 16,240 1, Source: NJ Department of Health & Senior Services Health Care Financing Systems: Summary of Inpatient Utilization 2013, 2014, 2015 and 2016 (B-2)

12 Page 12 The need for special equipment and services in the area will not be impacted because the Applicant is to maintain the facility as an acute care general hospital at the same licensed bed complement and services levels. Department staff relies on the Applicant s commitment to maintain inpatient services and its acknowledgement that the Applicant s business does not include the reduction of any existing inpatient services, staff or ancillary services. Adequacy of Financial Resources and Sources of Present and Future Revenues: According to NJMHMC s response to completeness questions, the Applicant has a net worth of approximately $133.8 million, with $7.3 million cash on hand and a working line of credit agreement providing up to $17.5 million, suggesting that the Applicant has sufficient resources to acquire MHMC. Subsequent to MHA s purchase of MHMC from Liberty Healthcare System, Inc, Condition 11(c) of the CN approval required MHA to submit audited financial statements. As of June 19, 2017, MCHC s audited financial statements for 2014 and 2015 had not been filed with the Department. The Applicant states that while conducting its due diligence, it reviewed all audited financial statement reports from December 31, 2011 through December 31, 2014 inclusively. The Applicant further states that it is certain that a combination of available cash and credit will enable [it] to meet all of the facility s obligations. As noted, the Applicant is expected to maintain the facility as an acute care general hospital at the same licensed bed complement and service levels, at least initially. It is anticipated that sufficient manpower in the several professional disciplines is available based on the commitment to maintaining existing services and the recruitment of additional medical staff. The economic or financial impact on the delivery of health care services in the region or statewide will be maintained based on the Applicant s statement to maintain inpatient and out-patient services at existing levels. The Department notes that, in response to completeness questions regarding increasing MHMC s performance by developing an in-network strategy, the Applicant stated that it will revisit contracts with insurers not currently in-network to develop contracts and pricing that will provide financial security to MHMC and also eliminate any stressors that currently exist between MHMC and the community it serves as a result of out of network billing.

13 Page 13 According to the Applicant, MHMC has three managed care contracts, two of which have just been renegotiated for three years. The contracts that are currently in force are Horizon Blue Cross and Blue Shield Commercial, Aetna and Horizon NJ Health. The Horizon Commercial and the Aetna contracts have just been renegotiated. All other contracts are out of network. NJMHMC has committed to accepting all contracts in place at the time of the ownership transfer. Center Payor Mix Years: 2014, 2015, Projected 2016, Projected 2017, and Projected Proj Proj Proj Medicare 23% 20% 23% 23% 23% Medicaid 12% 6% 6% 6% 6% Blue Cross 14% 17% 17% 17% Commercial 64% 59% 53% 53% 53% Indigent 1% 1% 1% 1% 1% Staff Recommendations: While staff have concerns with the consistent low utilization at the Hospital and with the fact that the Applicant is borrowing a significant amount of the purchase price from the current owner, based on the documentation of compliance with regulatory and statutory criteria, Department staff recommends approving the transfer of ownership of MHMC from MHA to NJMHMC for the following reasons and with the conditions noted below: Reasons: 1. NJMHMC is committed to continue to operate MHMC as a general hospital with no disruption of services, no reduction of services and at the same level of licensed beds and services as currently operating at the Hospital. Staff agrees that the maintenance of MHMC with its current bed/service complement will not have a negative impact on other area hospitals upon transfer. 2. The Applicant has committed to hire substantially all the individuals who are employed by MHMC at the time of the closing of the transfer of ownership. 3. NJMHMC has stated that it will maintain all of the existing charity care policies currently in place at MHMC and that it will continue to ensure access to quality health care services to the Secaucus community without regard to patients ability to pay.

14 Page The Applicant complies with the Department s general transfer of ownership criteria: there is a willing buyer and seller; the buyer has presented a financially feasible project; and the buyer has an acceptable licensing track record. Conditions: Based on this documentation of compliance with regulatory and statutory criteria, Department staff recommends approving this transfer of ownership with the following conditions: 1. The Applicant shall file a licensing application with the Department s Division of Certificate of Need and Licensing (Division) to execute the transfer of the ownership of the assets of MHMC to NJMHMC. 2. The Applicant agrees to retain substantially all of the current employees at MHMC. Six months after licensure, NJMHMC shall document to the Division the number of full-time, part-time and per diem employees retained and provide the rationale for any workforce reductions. 3. Within 60 days of licensure, the Applicant shall notify the Division, in writing, of the individual who is responsible for the safekeeping and accessibility of all MHMC s patients medical records (both active and stored) in accordance with N.J.S.A. 8: et seq. and N.J.A.C. 8:43G Within twelve months of licensure, and annually thereafter for five years, the Applicant shall provide the Division with a written report detailing: a. Its plan to reduce unnecessary and duplicative services and excess inpatient beds, if any; b. Its plan for addressing the need to expand or add ambulatory care services; and c. Capital improvement plans, including physical plant improvements, equipment upgrades and additions (including IT), and other capital projects. 5. The Applicant shall invest in programs designed to improve public health, community health services, and health and wellness and, within twelve months of licensure, shall provide the Division with a written sustainability plan detailing how it intends to ensure the financial viability of such programs. NJMHMC s investment in such programs shall be coordinated with its development and

15 Page 15 implementation of the Community Health Needs Assessment (CHNA) referenced in Condition NJMHMC shall operate MHMC as a general hospital, in compliance with all regulatory requirements. Any changes involving either a reduction, relocation out of MHMC current service area, or elimination of clinical services or community health programs offered by MHMC s former ownership shall require prior written approval from the Department and shall be subject to all applicable statutory and regulatory requirements. 7. NJMHMC shall continue compliance with N.J.A.C. 8:43G-5.21(a), which requires that [a]ll hospitals... 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 annually 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), the Applicant shall not only comply with federal Emergency Medical and Active Labor Act (EMTALA) requirements, but also provide care for all patients who present themselves at MHMC without regard to their ability to pay or payment source, and shall provide unimpaired access to all services offered by the Hospital. 9. The value of indigent care provided by MHMC shall be determined by the dollar value of documented charity care, calculated at the prevailing Medicaid rate, and shall not be limited to the amount of charity care provided historically by MHMC. 10. Within 60 days of licensing, NJMHMC shall establish a Governing Board for the Hospital responsible for (a) representing the Hospital in the community and taking into account the views of the community in its deliberations; (b) participating in MHMC community outreach programs; (c) supervising the Hospital s Charity Care policies and practices; (d) monitoring financial indicators and benchmarks; (e) monitoring quality of care indicators and benchmarks; and (f) developing and implementing a CHNA that aligns itself with Healthy New Jersey 2020, the State s health improvement plan and health promotion and disease prevention agenda for the decade. The Governing Board shall adopt bylaws and maintain minutes of monthly meetings. NJMHMC shall submit to the Division, on an annual basis, a current working description of the Governing Board s authorities, roles and responsibilities, and governance authority. On an annual basis, NJMHMC shall

16 Page 16 provide the Division with the Governing Board s roster and advise the Division of any significant changes to the Governing Board s policies governing Board composition, governance authority, and Board appointments made during each year that the Hospital is in operation. The Governing Board shall maintain suitable representation of the residing population of the Hospital s service area who are neither themselves employees of, nor related to, employees or owners of, MHA or any parent, subsidiary corporation, or corporate affiliate of MHA. 11. Within 30 days of licensing, NJMHMC shall provide the Division with an organizational chart of the Hospital and each service that shows lines of authority, responsibility, and communication between NJMHMC and hospital management and the Governing Board. 12. Every twelve months for the next five years, starting on the date a license is issued to the Applicant, NJMHMC shall report to the Division the progress on the implementation and measured outcomes of the following initiatives noted in the application and in these staff recommendations (a through e below) to improve the operational efficiency and quality of care at MHMC, and shall present the most current report to the public at the Hospital s Annual Public Meeting: a. Negotiations with health insurers on new contracts to generate better access for patients at MHMC; b. Efforts to fill service gaps to actively recruit new physicians and encourage those physicians who previously utilized the Hospital to once again return to provide care; c. Efforts to work in conjunction with community leaders and their own medical staff as well as surrounding hospitals to identify health care needs for more specialized services and recruit appropriate medical staff to fill any service gap; d. Efforts to implement a community outreach program to provide more accessible primary care in an effort to change the community culture of using the Emergency Department as a primary care provider thereby allowing the Emergency Department to function as intended for the delivery of emergency care; and e. Efforts to expand out-patient services and reduce or eliminate duplicative services and excess inpatient beds.

17 Page Within 90 days of licensure, NJMHMC shall develop and participate in a Community Advisory Group (CAG) to provide ongoing community input to the Hospital s CEO and the Hospital s Governing Board on ways that NJMHMC can better meet the needs of the residents in its service area. This would include participating in the development and updating of the CHNA referred to in Condition 10. a. NJMHMC shall determine the membership, structure, governance, rules, goals, timeframes, and the role of the CAG in accordance with the primary objectives set forth above and, within 60 days from the date of formation of the CAG, shall provide a written report to the Hospital s Governing Board setting forth that information, with a copy to the Division and subject to the Department s approval. b. NJMHMC may petition the Department to disband the CAG not earlier than three years from the date of licensure and on a showing that all of the requirements in Condition 15 have been satisfied for at least one year. 14. For the initial five years following the transfer of ownership, NJMHMC shall submit annual reports to the Division detailing: a. The investments it has made during the previous year at the Hospital, including a detailed annual accounting of any long- or short-term debt or other liabilities incurred on the Hospital s behalf and reflected on NJMHMC s balance sheet; b. The transfer of funds from the Hospital to any related entity, including detail regarding the amount of funds transferred, in order to document that assets and profits reasonably necessary to accomplish the healthcare purposes remain with the Hospital. Transfer of funds shall include, but not be limited to, assessment for corporate services, transfers of cash and investment balances to centrally controlled accounts, management fees, capital assessments, and/or special one-time assessments for any purpose; c. All financial data and measures required pursuant to N.J.A.C. 8:31B and from the financial indicators monthly reporting; and d. A list of completed capital projects itemized to reflect the project, its expenditure, and the date it was completed. 15. Within 15 business days of approval of this application, NJMHMC shall provide a report to the Division detailing its plans for communications to MHMC s staff, the

18 Page 18 community, including but not limited to elected officials, clinical practitioners, and EMS providers, concerning the approval of the transfer of the license and the availability of fully-integrated and comprehensive health services. 16. Within 180 days of the close of its reporting period, NJMHMC shall submit audited annual financial statements for that period to the Department pursuant to N.J.S.A. 26:2H-5.1(b). Concurrent with the submission thereof to the Department, NJMHMC shall post on the home page of the Hospital s website direct links to its audited annual financial statements. 17. Within 45 days of the close of each quarter of its reporting period, NJMHMC shall submit to the Department its cumulative unaudited quarterly financial statements through that quarter. Within the earlier of either 15 days of the submission thereof to the Department, or 60 days of the close of a reporting period quarter, NJMHMC shall post on the home page of the Hospital s website direct links to its cumulative unaudited quarterly financial statements either as a stand-alone document, or at the page upon which they appear in either the EMMA(R) or the EDGAR systems. 18. NJMHMC can elect to post, with or adjacent to the unaudited quarterly financial statements that it posts, an accurate statement that highlights and describes the unaudited nature thereof and any caveat associated therewith. 19. NJMHMC can elect to apply to the Department for a waiver of compliance with Condition No. 19 above on the grounds that posting unaudited financial statements would conflict with applicable filing and disclosure standards, or other applicable law. 20. All annual and quarterly statements shall be prepared in accordance with Generally Accepted Accounting Principles. 21. Prior to licensure, NJMHMC shall submit to the Department all outstanding audited annual financial statements that were prepared for MHA prior to the transfer of ownership. 22. Within 60 days of posting its Audited Annual Financial Statements to its website, NJMHMC s Governing Board shall hold an Annual Public Meeting in the Hospital s primary service area, pursuant to N.J.S.A. 26:2H-12.50, and shall make copies of those audited annual financial statements available at the Annual Public Meeting. NJMHMC shall develop mechanisms for the meeting that address the following:

19 Page 19 a. An explanation, in layperson s terms, of the audited annual financial statement; b. An opportunity for members of the local community to present their concerns to the Hospital s Governing Board regarding local health care needs and Hospital operations; c. A method for NJMHMC to publicly respond, in layperson s terms, to the concerns expressed by community members at the Annual Public Meeting; and d. NJMHMC shall develop these methods (a through c above) within 90 days of the date of this approval letter and provide them to the Division. 23. After the transfer is implemented: a. NJMHMC 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. NJMHMC 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 that may result in increases in out-of-network coverages. At a minimum, NJMHMC shall have routine contact with the existing HMO and commercial insurers. If the existing HMO and commercial insurers fail to respond to requests for negotiations, then NJMHMC shall notify the Department and DOBI to request assistance. c. Within 10 days of licensure, NJMHMC shall post in a conspicuous place on the home page of the Hospital s website a link to information, of which it maintains the accuracy, identifying the health benefits plans in which the hospital participates. NJMHMC shall provide in writing the information it posts to any person upon written, electronic, telephonic, or in-person request therefor. Upon making or amending an internet posting that N.J.A.C. 8: requires, NJMHMC concurrently shall notify the Department of the occurrence of the posting by transmitting an containing a link to the posting to the following address:

20 Page 20 d. Within the first year of licensure, NJMHMC 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. NJMHMC shall document how it will provide notice to patients and providers, as well as the impact that such action is reasonably expected to have on access to health care. e. During the first year from the date of licensure, NJMHMC shall report to the Department, for each six-month period, the Hospital s payer mix and the number and percent of total hospital admissions that came through the emergency department. For four years thereafter, MHMC shall report the aforesaid information to the Department on an annual basis. 24. In accordance with the provisions of N.J.S.A. 26:2H-18.59h, NJMHMC 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. 25. NJMHMC shall continue compliance with N.J.A.C. 8:43G-5.21(a), which requires that all hospitals provide on a regular and continuing basis, out-patient and preventative services, including clinical services for medically indigent patients, for those services provided on an in-patient basis. 26. NJMHMC shall maintain compliance with the United States Department of Health and Human Services Standards for Culturally and Linguistically Appropriate Services in Health and Healthcare. Compliance shall be documented and filed with the Division with annual licensing renewal. 27. For at least five years, NJMHMC shall not enter into any contract or other service or purchasing arrangements, or provide any corporate allocation, or equivalent charge to affiliated organizations within NJMHMC except for contracts or arrangements to provide services or products that are reasonably necessary to accomplish the healthcare purposes of the Hospital and for compensation that is consistent with fair market value for the services actually rendered, or the products actually provided. 28. NJMHMC shall submit any proposed plan including documented compliance with law and regulations as it relates to out-of-network cost sharing with patients to DOBI prior to the implementation. NJMHMC shall not implement any out-ofnetwork cost sharing plans if DOBI objects thereto.

21 Page NJMHMC shall comply with requirements of the DOLWD s Division of Wage and Hour Compliance that address conditions of employment and the method and manner of payment of wages. 30. Prior to licensure, NJMHMC shall identify a single point of contact to report to the Division concerning the status of all of the conditions referenced within the time frames noted in the conditions. All of the conditions shall also apply to any successor organization to NJMHMC who acquires MHMC within five years from the date of CN approval.

22 Page 22 Appendix A Licensed Beds Summary of Utilization Statistics Bayonne Medical Center Christ Hospital Jersey City Medical Center Palisades Medical Center Hoboken University Hudson County Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC

23 Page 23 Bayonne Medical Center Christ Hospital Jersey City Medical Center Palisades Medical Center Hoboken University Hudson County Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC

24 Page 24 Bayonne Medical Center Christ Hospital Jersey City Medical Center Palisades Medical Center Hoboken University Hudson County Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC

25 Page Hudson County Bayonne Medical Center Christ Hospital Beds Occp Rate ADC Beds Occp Rate ADC Jersey City Medical Center Beds Occp Rate ADC Palisades Medical Center Beds Occp Rate Hoboken University ADC Beds Occp Rate ADC

26 Page Essex County Clara Maass Medical Center Beds Occp Rate ADC East Orange General Hospital Beds Occp Rate Hackensack University Mountainside ADC Beds Occp Rate ADC University Hospital Beds Occp Rate Saint Michael's ADC Beds Occp Rate ADC

27 Page 27 Clara Maass Medical Center East Orange General Hospital Hackensack University Mountainside University Hospital Saint Michael's Essex County Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC

28 Page 28 Clara Maass Medical Center East Orange General Hospital Hackensack University Mountainside University Hospital Saint Michael's Essex County Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC

29 Page 29 Clara Maass Medical Center East Orange General Hospital Hackensack University Mountainside University Hospital Saint Michael's Essex County Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC Beds Occp Rate ADC

30 Page 30 Hackensack University Medical Center Holy Name Medical Center Bergen County Beds Occp Rate ADC Beds Occp Rate ADC Hackensack University Medical Center Holy Name Medical Center Bergen County Beds Occp Rate ADC Beds Occp Rate ADC Hackensack University Holy Name Medical Center Bergen County Beds Occp Rate ADC Beds Occp Rate ADC

31 Page 31 Hackensack University Holy Name Medical Center Bergen County Beds Occp Rate ADC Beds Occp Rate ADC Source: Department s Health Care Financing Systems Summary of Inpatient Utilization (B-2)

32 Page 32 Appendix B Maintained Beds Summary of Utilization Statistics Bayonne Medical Center Christ Hospital Jersey City Medical Center Palisades Medical Center Hoboken University Hudson County Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC

33 Page 33 Bayonne Medical Center Christ Hospital Jersey City Medical Center Palisades Medical Center Hoboken University Hudson County Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC

34 Page 34 Bayonne Medical Center Christ Hospital Jersey City Medical Center Palisades Medical Center Hoboken University Hudson County Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC

35 Page 35 Bayonne Medical Center Christ Hospital Jersey City Medical Center Palisades Medical Center Hoboken University Hudson County Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC

36 Page 36 Clara Maass Medical Center East Orange General Hospital Hackensack University Mountainside University Hospital Saint Michael's Medical Center Essex County Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC Beds Occ Rate ADC