New Jersey Hospital Chain Files for Bankruptcy
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 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.
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."
To ensure continued operations at Bayonne, the department asked CarePoint to submit a disaster plan to deal with such situations.
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.
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.
"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.
