New Jersey Hospital Chain Files for Bankruptcy

By: Epoch Times - Business Posted On: November 04, 2024 View: 2

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One of the hospitals in the financially distressed healthcare system serves nearly 100,000 people every year.

CarePoint Health Systems, a New Jersey-based healthcare system consisting of three hospitals, has filed for voluntary bankruptcy and financial restructuring owing to ongoing cost challenges.

In order to facilitate the restructuring process, the nonprofit filed for Chapter 11 relief in the U.S. Bankruptcy Court in Delaware.

“CarePoint has obtained $67 million in new financing to ensure that its hospitals remain open and that there will be no interruptions to its ability to provide patient care in the communities it serves throughout this process,” it said in a Nov. 3 statement.

“CarePoint Health Systems oversees the operations of three hospitals in Hudson County, New Jersey: Bayonne Medical Center, Christ Hospital in Jersey City, and Hoboken University Medical Center. Collectively, they provide services to over 60 percent of the population of the county and 65 percent of their patients are uninsured or underinsured.”

The Bayonne Medical Center is an acute-care facility with 261 beds, serving close to 100,000 patients annually. Christ Hospital is a general acute-care center with 349 beds, while Hoboken University Medical Center is a 348-bed acute-care hospital with a 34-bay emergency room.

In a voluntary bankruptcy petition filed on Sunday, CarePoint estimated it has up to 49 creditors. The nonprofit owes more than $109 million to 30 of the largest unsecured creditors, according to the petition.

In addition to CarePoint, multiple entities affiliated with the healthcare system have also filed for bankruptcy.

“The decision to initiate this strategic reorganization has been driven by several factors, including the dramatic increase in direct costs of operating the hospitals after COVID, insufficient state funding, and persistent reimbursement challenges that hospitals across the country have been facing,” the nonprofit said.

An April 2024 report from the American Hospital Association (AHA) had pointed out that hospitals were suffering from “inadequate increases in reimbursement.”

Between 2021 and 2023, overall inflation grew by 12.4 percent, which was more than two times faster than the Medicare reimbursement for hospital inpatient care, it said.

Dr. Achintya Moulick, who transitioned the CarePoint system to a nonprofit and helped keep the facilities open following the COVID-19 pandemic, will lead the organization in its current transition.

Moulick said the restructuring bankruptcy was chosen after thoroughly evaluating all options.

“Safety net hospitals like Christ Hospital and Hoboken University Medical Center are vital lifelines for the uninsured, underinsured, and most vulnerable populations.”

CarePoint claimed that it has taken the required steps to ensure that employees continue receiving their salary and benefits.

Health Care Facilities in Bankruptcy

There have been indications that CarePoint was facing financial difficulties and that some of its hospitals could close shop.

Back in February, the State of New Jersey’s Department of Health sent a letter to CarePoint, warning that the Bayonne Medical Center could experience disruption in service or be forced to shut down abruptly due to the “significant financial distress” experienced by the nonprofit.

To ensure continued operations at Bayonne, the department asked CarePoint to submit a disaster plan to deal with such situations.

Multiple healthcare networks have filed for bankruptcy over the past months. Last month, for example, MBMG Holding LLC and several entities operating under it, collectively called the Clinical Care Medical Centers, filed for Chapter 11 bankruptcy following a decline in revenue and liquidity challenges.

The entity faced “hurdles resulting from industry and regulatory headwinds,” which, combined with highly leveraged balance sheets, “significantly challenged” operations, and depleted liquidity. The “most significant headwind” was a decline in revenues from Medicare reimbursements, according to its filing.

In May, Steward Health, the largest physician-led hospital operator in the United States, made a bankruptcy filing.

The decision was taken after Steward faced rising material and operational costs due to inflation, elevated costs of labor, and “insufficient reimbursements” from the Medicaid and Medicare programs.

According to a January report by Gibbins Advisors, the U.S. healthcare sector saw “record” bankruptcy filings last year. An analysis of bankruptcies among companies with more than $10 million in liabilities found 73 bankruptcy filings from the sector in 2023. This was the highest number of filings in five years.

“We are seeing a lot of distress in health care as the market remains very challenging for providers, so we expect to see continued levels of health care bankruptcies in 2024 that we saw last year,” Tyler Brasher, director at Gibbins Advisors, said at the time.

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