November 2, 2006

HUMC, Pascack Hospital May Join ; Ailing Westwood Center to Stay Open


Hackensack University Medical Center and Pascack Valley Hospital are negotiating a merger that will allow the financially ailing Westwood institution to stay open as a full-service hospital.

Hackensack would become the new owner of Pascack Valley, and fill the hospital's empty beds by enhancing services in cancer care, cardiology, and maternal and child health, officials of both hospitals said Wednesday.

Officials of the two institutions signed a memorandum of understanding that gives them 75 days to discuss the financial and legal details of the agreement. If completed as expected, the acquisition would take place early next year.

"It's a win-win for the staff, physicians and employees of both hospitals," Donald Genaro, chairman of Pascack's board of directors, told 100 physicians and hospital executives gathered in his hospital's boardroom Wednesday. "But more than that, the real winners are the communities we serve."

"We're getting together not to consolidate the two hospitals, but to grow them," said John Ferguson, Hackensack's president and chief executive officer. "Pascack has been a great hospital, but it certainly has room."

The acquisition would mark the first foray into northern Bergen County for Hackensack, which stayed out of the merger mania of the last decade while concentrating on its own expansion. Hackensack's physical facilities have tripled in size over the last 14 years, but room is running out on its hillside campus.

Pascack's Old Hook Road campus offer opportunities to expand programs and attract new patients, at a time when Hackensack's beds are more than 95 percent full.

Patients from Westwood, Park Ridge, Emerson, Hillsdale and surrounding towns are attractive because they generally have health insurance. Pascack is expected to become a conduit for those needing Hackensack's specialized services, such as open-heart surgery, high- risk maternity care and pediatric oncology.

For Pascack, the acquisition provides a way out of nearly insurmountable financial difficulties brought on by huge construction debts and occupancy rates that have hovered at less than 35 percent the lowest in the county.

Pascack's construction of a new building to house maternity care and outpatient services burdened it with more than $80 million in debt. Operating losses through August this year already totaled $13.7 million.

Hackensack will become "responsible for the assets and the liabilities" of Pascack Valley, Ferguson said. The present agreement calls for no cash payment to be made for Pascack. Details will be worked out during the negotiations.

Board members see the merger as preferable to a sale to a for- profit health-care corporation, or conversion to long-term care or other uses, which might have been considered as the financial situation deteriorated further. Pascack will be able continue to offer the services of an acute-care hospital, as its founders and benefactors envisioned.

"This should give peace of mind to patients," Genaro said.

Under the merger, the Pascack board would be mostly appointed by Hackensack University Medical Center, Genaro said. Charitable gifts that have been made to Pascack would remain with it, and new gifts could be designated for use there.

The hospital is to be renamed "Pascack Valley Hospital, an affiliate of Hackensack University Medical Center."

"There's quite a bit of excitement that we will become part of Hackensack University Medical Center, bringing the cachet of that name," said Richard Henning, a member of the hospital's board of directors and a Park Ridge councilman.

Pascack's 900 employees, half of whom are unionized, would become employees of Hackensack, officials said.

Union contracts would be honored, Ferguson said. Layoffs are unlikely, he said: "It will be my hope that we will start to hire, frankly."

Ann Twomey, president of the Health Professional and Allied Employees union, said her union "stands ready to work with both [hospital] administrations to achieve these goals." However, the union would challenge the merger if it deprived nurses and technicians of the working standards they achieved through their contract, she said.

Physicians at both institutions were optimistic about the merger.

"The general consensus of the staff is that we all are very fond of this hospital and look forward to seeing it flourish with Hackensack," said Dr. Laurene DiPasquale, president of the general active staff at Pascack.

About half of the physicians at Pascack already have admitting privileges at Hackensack.

"I've been on the staff of Hackensack for 20 years, and Pascack Valley for 26 years," said Sheldon Eisenberg, chief of cardiology at Pascack Valley, who said he refers many patients to Hackensack's open-heart surgery program. "This has been a close working relationship for a long time."

"We're not strangers," said Dr. Peter Gross, chairman of the internal medicine department at Hackensack. "I think it will be easy to work things out."

Dr. Phillip LaStella, director of emergency medicine at Pascack Valley, said the new nexus would mean "survival."

"We see ourselves in a little better position to survive," LaStella said.

Assemblywoman Charlotte Vandervalk, R-Montvale, who attended the announcement, said she was "tremendously excited" by the potential merger. Pascack was founded by community leaders to benefit the people of the area, she said, and no one wanted to see it fail.

"Hopefully this will be a positive move for [Pascack Valley]," said Anita Verghese, a credit analyst with Standard and Poor's, which rated the hospital well below investment grade at B+, with a negative outlook. "They've been struggling for a while."

As it has struggled, the hospital has experienced turnover among top executives. Sid Mitchell replaced 23-year veteran Louis Ycre Jr. as chief executive officer in January 2005, after the latter had alienated physicians and embarked on the ill-timed building program.

And this year the chief financial officer, Brian McIndoe, was replaced.

Problems with converting to a new computer system led to a loss of some reimbursements, Mitchell said.

Hackensack, the state's busiest hospital, has seen patient volumes soar.

"The place offers Hackensack breathing space and a reach further out into the county at little or no capital cost," said Don Malafronte of the Urban Health Institute.

"That is an attractive alternative to high-cost construction at its present site."

The acquisition would not change Hackensack's plans to build a new parking garage and cancer center, Ferguson said.

The final deal must be approved by the state Department of Health and Senior Services and the state Attorney General's Office.


Staff Writer Bob Groves contributed this article. E-mail: [email protected]



Fast facts

Hackensack University Medical Center

* 42,000 inpatients last year

* The busiest hospital in New Jersey

* 781 beds

Pascack Valley Hospital

* 11,200 inpatients last year

* An average occupancy rate of 35 percent the lowest in the county

* Licensed for 291 beds, but only 125 are staffed



hospitals' contrasting fortunes

Hackensack University Medical Center

* Founded in 1888 as Bergen County's first hospital.

* With 7,200 employees, HUMC is the county's largest employer.

* Annual budget is over $1 billion.

* Tripled in size since 1992 in a densely built section of Hackensack. Last month, it won city approval for construction of a new cancer center and five-story parking garage, despite some neighborhood opposition.

* A teaching and research hospital affiliated with the University of Medicine and Dentistry of New Jersey-New Jersey Medical School, its services include open-heart surgery, bone marrow and stem cell transplants, kidney and pancreas transplants, trauma care and cancer treatment.

* Received a Magnet Award for Nursing Excellence in 1995 and has kept it.

* Employees are not unionized.

* Construction bonds worth $150 million for the Women's and Children's Pavilion received an Aaa rating from Moody's Investors Service.

Pascack Valley Hospital

* Pascack Valley Hospital opened in 1959 as an 89-bed community hospital. It is the smallest of the five acute-care hospitals in Bergen County.

* Outstanding debt totaled $82 million as of October 2005, when Standard & Poor's rated the bonds B+, below investment grade, with a negative outlook. Hospital operations have lost money in four of the last five years, except 2002. Losses were $10.8 million in 2004 and $12.7 million in 2003.

* The hospital does not have a managed-care contract with Horizon Blue Cross and Blue Shield of New Jersey, the state's largest health insurer.

* A four-story building opened last year to house maternity and newborn care, as well as outpatient rehabilitation and administrative offices.

* The hospital's 420 nurses and technicians are unionized and this year ratified a contract that lasts through June 2009.

* A new chief executive officer, Sid Mitchell, was hired in January 2005 after the departure of Louis Ycre Jr., after 23 years. Brian McIndoe, the hospital's chief financial officer, left this year.


(c) 2006 Record, The; Bergen County, N.J.. Provided by ProQuest Information and Learning. All rights Reserved.