MINUTES OF THE STATE HEALTH PLANNING BOARD … SHPB Meeting... · Susan Olszewski, Chairperson...

MINUTES OF THE STATE HEALTH PLANNING BOARD MEETING

Thursday, February 2, 2017

Members Present:

Susan Olszewski, Chairperson Henry Kane Dr. Joseph Barone Connie Bentley McGhee Elsworth Havens (Representing Michael Baker) Michael Gross Dr. Poonam Alaigh Susan Dougherty (Representing Commissioner Bennett, Department of Health) Susan Brewen-Alvino (Representing Commissioner Blake, Department of Children & Families) Louise Patterson (Representing Commissioner Connolly, Department of Human Services)

Excused Absent:

Catherine Ainora Jon Brandt Dr. Judy Donlen

Staff:

John Calabria Jamie Hernandez Francesco Ferrantelli, DAG

CALL TO ORDER Susan Olszewski, Chairperson opened the meeting at the Department of Health, Market and

Warren St., H&A Bldg., 1st Floor, Auditorium, NJ on Thursday, February 2, 2017.

MOTION SUMMARY

1. Approval of January 12, 2017 minutes

Motion – Ms. Olszewski, Second – Dr. Barone

2. Approval of Certificate of Need Application for the Acquisition of Memorial Hospital of

Salem County by Prime Healthcare Foundation Inc. from CHS/Community Health

System, Inc.

Motion – Mr. Gross, Second – Ms. Bentley-McGhee

February 2, 2017

VOTING RECORD

VOTING BOARD MEMBER ROLL 1 2

Dr. Donlen - - -

Ms. Ainora - - -

Mr. Kane X A Y

Ms. Olszewski X Y Y

Ms. Bentley-McGhee X Y Y

Dr. Barone X Y Y

Mr. Havens (representing Mr. Baker) X A Y

Mr. Gross X - Y

Dr. Alaigh X A Y

Mr. Brandt - - -

Susan Dougherty (representing Ms.

Gibson) – non voting member X - -

Ms. Patterson – non voting member X - -

Ms. Brewen-Alvino – non voting

member X - -

Total

Total Absent

10

3-Y

0-N

3-A

0-R

7-Y

0-N

0-A

0-R

KEY: Y=YES N=NO A=ABSTAIN R=RECUSE

1

1 - - - - - - - - - - -X

2 STATE HEALTH PLANNING BOARD

3 - - - - - - - - - - -X

4

COMPUTERIZED TRANSCRIPT of the stenographic

5

notes of the proceedings in the above entitled

6

matter as taken by DENISE L. SWEET, a Certified

7

Court Reporter and Registered Professional Reporter,

8

at the DEPARTMENT OF HEALTH, Market and Warren

9

Streets, H&A Building, 1st Floor, Auditorium,

10

Trenton, New Jersey on Thursday, February 2, 2017,

11

at 9:30 in the forenoon.

12

13 State Health Planning Board Members

14 Susan E. Olszewski, Chairwoman

Susan Dougherty

15 Louise Patterson

Suzanne Brewen-Alvino

16 Connie Bentley-McGhee

Joseph Barone

17 Henry Kane

Ellsworth Havens

18 Michael Gross

Poonam Alaigh

19 Francesco Ferrantelli, Jr., DAG

Jamie Hernandez, Secretary

20

21

22

23

24

25

STATE SHORTHAND REPORTING SERVICE, INC.

2

1 I N D E X

2 AGENDA PAGE

3 I. Call to Order 3

4 II. Chairperson's Report 4

5 III. Commissioner's Report 7

6 IV. Certificate of Need Application for 7

the Acquisition of the Memorial

7 Hospital of Salem County by Prime

Healthcare Foundation, Inc. from

8 CHS/Community Health System, Inc.

9 A. Department Presentation 26

B. Public Comment on the Application 7

10 C. Applicant's Presentation 65

D. Board Discussion and Vote 104

11

V. Other Business 107

12

VI. Adjournment 109

13

14

15

16

17

18

19

20

21

22

23

24

25


3

1 MS. OLSZEWSKI: We have a quorum,

2 so I'm calling this meeting to order.

3 MS. HERNANDEZ: This is a formal

4 meeting of the State Health Planning Board.

5 Adequate notice of this meeting has been published

6 in accordance with the provision of Chapter 231

7 Public Law, 1975, c-10:4.10 of the State of New

8 Jersey entitled Open Public Meetings Act. Notice

9 was sent to the Secretary of State who posted the

10 notice in a public place. Notices were forwarded to

11 12 New Jersey newspapers, one New York newspaper,

12 one Philadelphia newspaper, three news organizations

13 and NJTV.

14 I will now call roll. Ms.

15 Dougherty?

16 MS. DOUGHERTY: Here.

17 MS. HERNANDEZ: Ms. Patterson?

18 MS. PATTERSON: Here.

19 MS. HERNANDEZ: Ms. Brewen-Alvino?

20 MS. BREWEN-ALVINO: Here.

21 MS. HERNANDEZ: Ms. Ainora? Mr.

22 Kane?

23 MR. KANE: Here on the phone.

24 MS. HERNANDEZ: Ms. Olszewski?

25 MS. OLSZEWSKI: Here.


4

1 MS. HERNANDEZ: Ms. Bentley-McGhee?

2 MS. BENTLEY-MCGHEE: Here via

3 telephone.

4 MS. HERNANDEZ: Dr. Barone?

5 DR. BARONE: Here live.

6 MS. HERNANDEZ: Mr. Gross? Mr.

7 Havens?

8 MR. HAVENS: Here.

9 MS. HERNANDEZ: Dr. Alaigh?

10 DR. ALAIGH: Here.

11 MS. HERNANDEZ: Mr. Brandt? Dr.

12 Donlen?

13 We have nine members present, which

14 does constitute a quorum.

15 MS. OLSZEWSKI: Okay. Thank you.

16 The first part of our agenda today after call to

17 order is the chairperson's report. Judy Donlen is

18 our Chair and Dr. Donlen is not here today. So, I'm

19 temporarily, I'm taking over for this meeting. And

20 the first item we have under the Chairperson's

21 report is approval of the minutes of the State

22 Health Planning Board meeting on January 12 of this

23 year. And I do have a few revisions that do alter

24 the information in this, so I think we need to get

25 those in.


5

1 The first one is on page 20 and,

2 it's line 9 on page 20. And it says, in the past

3 ten years so many, it says so many, many merged.

4 It's so many medi merged facilities. Instead of

5 many merged. It's medi merged, like the special

6 emergency centers.

7 Okay. On page 41, line three, it

8 should say, the line above says, 75 percent of which

9 are below 200 percent. It should say of federal

10 poverty levels.

11 On page 50, lines four and five

12 talks about building in Greenfield or on

13 Greenfield's site. It's green field is two words,

14 small g. It's not a city. It's a type of area to

15 build on. I can understand how that one got made.

16 And the last one just is on page

17 67, first line. It says, I'm interested to. It's

18 t-o-o and that's it.

19 MS. BENTLEY-MCGHEE: Connie McGhee

20 with a correction.

21 MS. OLSZEWSKI: Yes.

22 MS. BENTLEY-MCGHEE: May I speak?


24 MS. BENTLEY MCGHEE: This is on

25 page three. I noticed yesterday. Page three, the


6

1 voting record at the bottom, the word rescue should

2 be recuse.

3 MS. HERNANDEZ: That's my fault.

4 DR. BARONE: That's actually

5 correct.

6 MS. HERNANDEZ: Thank you.

7 MS. OLSZEWSKI: Thank you. Okay.

8 Any other changes? I move that we accept the

9 minutes with the changes that we have just put in.

10 DR. BARONE: I second it.

11 MS. HERNANDEZ: Mr. Kane?

12 MR. KANE: I was not at the

13 meeting, so I'll just abstain.




17 MS. BENTLEY-MCGHEE: Yes via

18 telephone.


20 DR. BARONE: Yes.

21 MS. HERNANDEZ: Mr. Havens?

22 MR. HAVENS: Abstain.

23 MS. OLSZEWSKI: Dr. Alaigh?

24 DR. ALAIGH: Abstain.

25 MS. HERNANDEZ: We have three


7

1 abstained and three yeses, motion moved.


3 Next item, the Commissioner's report. Is there a

4 Commissioner's report?

5 MS. DOUGHERTY: I do not have one.

6 MS. OLSZEWSKI: Okay. Thank you,

7 Susan. Now we're going to jump to the certificate

8 of need application for the acquisition of Memorial

9 Hospital of Salem County by Prime Healthcare

10 Foundation from CHS/Community Health System. We're

11 going to change the order in which we do things

12 today to go to public comment first and we have two

13 members of our State, two representatives, and we

14 have our Senate President, Senator Steve McSweeney,

15 Steve Sweeney. I'm sorry.

16 Would you like to speak now, sir?

17 SENATOR SWEENEY: We would like to

18 come up together, if that's okay.

19 MS. OLSZEWSKI: Okay.

20 SENATOR SWEENEY: Myself and

21 Assemblyman Burzichelli.

22 MS. OLSZEWSKI: Assemblyman

23 Burzichelli. Okay. The way we do it is, you just

24 state and spell your names for the record.

25 ASSEMBLYMAN BURZICHELLI: Good


8

1 morning, everyone. My name is John Burzichelli, B,

2 as in boy, U-R-Z-I-C-H-E-L-L-I, serving and

3 representing the Third Legislative District. I'm

4 here today to offer comment in the public record and

5 supplement the written letter that myself, Senate

6 President and Assemblyman Adam Taliaferro submitted

7 in the process.

8 We are in support of this

9 transaction, but we are asking this Board to

10 consider advising the Commissioner as part of the

11 transaction and condition of sale that the applicant

12 do two things. One, that they make a full

13 commitment to operate the acute care hospital and,

14 two, that they follow the procedures established in

15 the statute to affect a full return of the assets

16 remaining from the original transaction, presently

17 in two foundations, one in Morris County and one in

18 Salem County, totaling almost $50 million. This is

19 money we strongly believe belongs to this hospital

20 and considering the uncertainty of what's to happen

21 in hospital reimbursements coming forward, we think

22 the return of this money to this hospital is

23 essential and must be aggressively pursued.

24 We further request as part of the

25 condition that a special master be appointed to


9

1 facilitate and follow and process the flow of this

2 money back to the hospital. If this hospital is

3 going to have a chance to survive as a standalone,

4 not-for-profit hospital, it's going to need every

5 advantage it can possibly have and cash is the first

6 one. And the highest and best use of this money is

7 to contribute to a robust acute care facility in

8 this portion of Salem County so our economy can keep

9 and compete with Delaware and Christiana Health

10 Systems, which drains off a significant portion of

11 the economy related to healthcare in that part of

12 the county.

13 We are very, very resolute in our

14 position of this money returning to the hospital.

15 Both the Senate President and I were ground zero in

16 the original transaction and in helping to

17 understand and interpret the statute to allow the

18 very first sale ever of a not-for-profit hospital to

19 a for-profit hospital was Memorial Hospital in Salem

20 County. We had to go back and revise the statute,

21 because, by the way, it's the only transaction we're

22 aware of and that hasn't happened since, where there

23 was significant assets created by the transaction.

24 Therefore, the foundation was to be established.

25 And events have happened that have made us unhappy,


10

1 but that's not for today's discussion. The bottom

2 line here is that as a condition of the transaction

3 we request a special master be appointed to

4 facilitate the orderly return of the assets back to

5 the hospital where it originated from, where it

6 belongs and where it would do the most good.

7 Thank you for your servicing and

8 consideration. Senate President?

9 SENATOR SWEENEY: And, you know,

10 we're here, obviously, to show how strongly we feel

11 about this. Salem County desperately needs an acute

12 care hospital. Salem County is the, ranks 20th in

13 the State in wealth. It's one of the poorest

14 counties in the State of New Jersey.

15 When we originally supported the

16 first for-profit hospital in the State of New Jersey

17 it was out of desperation. Things didn't work out

18 the way we wanted them to work out and we lost the

19 care, we lost a lot of provisions in the healthcare.

20 So, we're supporting this. We're supporting Prime,

21 but as to the Deputy Speaker said, the foundation's

22 money belongs with the hospital and for some reason

23 people think it doesn't belong to the hospital in

24 Salem County. The foundation was created for

25 healthcare. This hospital has been run into the


11

1 ground. It's going to take an enormous amount of

2 investment to get it up to a place where we can

3 bring people back. And as the Deputy Speaker said,

4 we're losing so much economic opportunity, because

5 people are going to Delaware. As we're trying to

6 create synergies in New Jersey where people come to

7 New Jersey, it's completely the opposite. So, it's

8 only hurting the economy in Salem County.

9 So, we urge, I, basically, echo the

10 statements of the Deputy Speaker. We think the

11 money needs to stay with the hospital. Thank you.


13 I'm sorry. Yes. Would you like to ask a question?

14 DR. ALAIGH: Yes, if I could.

15 Thank you so much. And Senate President and Deputy

16 Speaker, I really enjoyed working with you when I

17 was with Governor Christie as running the Department

18 of Health and Senior Services at that time. The

19 question I have is, I think it's important, right,

20 if you have a rural community, having a hospital,

21 that's critical. So, are you suggesting that the

22 foundation money goes towards the sale? How does

23 that get transferred to hospital operations?

24 Because, you know, there is, with a foundation,

25 there's very strict regulations and policies in


12

1 terms of where that money gets spent. So, are you

2 suggesting, I just need to get a better

3 clarification of how you're suggesting the transfer

4 of funds into the acute operations of the hospital

5 when they're two distinct entities?

6 ASSEMBLYMAN BURZICHELLI: Well, two

7 points. One, that's why we are requesting, because

8 it's such a unique set of circumstances, the special

9 master be appointed to coordinate the mechanism you

10 just mentioned. The second thing, the statute is

11 very clear with regard to how the money returns

12 back. The Chapter Law was revised three or four

13 years ago with the support of the Attorney General

14 and the Governor, the advancement of the Senate

15 President. So, the steps to do this are in place.

16 It can be done one of two ways. It can be done in

17 Superior Court, which we feel that's how it should

18 occur. That's the first process and what

19 established the foundation to begin with and all

20 those checks and balances are in place. We feel

21 that's the best way to go, but we also feel a

22 special master should be appointed. So, you're

23 correct about the fact you're going from one

24 structure of foundation. So, the question will be,

25 is this Board going to advise the Commissioner or is


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1 the Commissioner going to suggest or is the Attorney

2 General going to suggest that a new foundation

3 within the Prime operation be established to support

4 that local hospital? Those details have to be

5 worked out.

6 Bottom line is, there's a pot of

7 money in two places and it needs to go back to where

8 it's supposed to be and we think the statute

9 provides the step and then it has to be fine tuned.

10 DR. ALAIGH: Maybe this is a

11 question, if you're telling me it's out of scope,

12 I'll address it to the Department, but then would

13 the transaction of the sale of the hospital include

14 the foundation as a separate transaction? So, maybe

15 we can talk about that. So, the value of the sale

16 for the hospital entity is X dollars and the value

17 of the foundation is Y. Then is the entire

18 transaction X plus Y or is it inclusive of Y?

19 ASSEMBLYMAN BURZICHELLI: I would

20 say that you would think on first blush it's

21 inclusive, but I wouldn't say that with great

22 certainty. I would fall to the Attorneys General's

23 operation of how this should happen, because this

24 doesn't happen with frequency. So, it's going to

25 be --


14

1 DR. ALAIGH: Because the two

2 entities have asset value. So, when you do the

3 transaction, it, you know, you're going to have to

4 evaluate the two assets independently and come up

5 with the sale.

6 SENATOR SWEENEY: We worked with

7 the Attorney General and the Governor to create the

8 statute to deal with something like this and it is

9 in place. So, what we're asking to do is to ensure

10 that it is followed. You know, this is unique.

11 This was the first, this was absolutely the first

12 sale and, you know, we're not against for-profit.

13 We're very happy Prime is coming in as a nonprofit

14 and going back to its core mission to provide

15 healthcare, not hoping to make a lot of money, but

16 most of the concerns of the foundation and the

17 bizarre behavior of the foundation to move money

18 into another foundation to try to shield it, it's

19 the people of Salem County's money. That's where it

20 belongs. The foundation actually moved from Salem

21 to Morris County to hide it, to shield it, and for

22 many years the foundation, actually, the operation

23 of the foundation exceeded the grants that were

24 given.

25 And, again, this is the people of


15

1 Salem County. This is not mine. It's not John's.

2 It's the people's. It needs to go towards

3 healthcare and this hospital has been run into the

4 ground. It was an orphan. You know, when CHS first

5 bought it, they had a plan. They were going to have

6 a much larger footprint. It didn't take place.

7 They wound up an orphan and we've had nothing, we've

8 had major labor problems there with nurses, which is

9 a different issue. We've spoken to Prime and we're

10 hoping that Prime will be a better fit than CHS was

11 and that they negotiate a contract that's one

12 fairly, but this is something that the money needs

13 to stay with the hospital, period.

14 ASSEMBLYMAN BURZICHELLI: And I

15 have confidence that the statute is appropriate

16 guidance, because it involves the Attorney General,

17 it involves the Superior Court engagement and it

18 will involve the Department of Health. So, the

19 orderly transition of this asset back to the

20 hospital in the way it will benefit the hospital and

21 the region, I think it can be assured with

22 confidence.

23 DR. ALAIGH: With a point person

24 assigned to manage that transfer?

25 SENATOR SWEENEY: The special


16

1 master.

2 DR. ALAIGH: The special master.

3 ASSEMBLYMAN BURZICHELLI: I think

4 it's essential. I think the scenario it is going,

5 it will conform and be satisfactory and established

6 at the Departments. And the Attorney General has

7 requirements of a charitable asset. It's a

8 charitable asset we're talking about.

9 DR. ALAIGH: Again, thank you.

10 Thank you for your service. I really appreciate you

11 both, your contribution.

12 MS. OLSZEWSKI: Thank you.

13 Ellsworth?

14 MR. HAVENS: Great presentation.

15 Question of the Board and the Department, since, my

16 assumption, this is not a condition of the C of N;

17 correct?

18 MS. OLSZEWSKI: It's, correct, it's

19 not a condition today. I thought we could talk to

20 the Department about this issue.

21 MR. HAVENS: It would be a

22 recommendation issued from this Board to the

23 Commissioner and then following up with the Attorney

24 General; correct?

25 SENATOR SWEENEY: And we came here,


17

1 we came here just to make our position clear and

2 this Board has a decision to make and a

3 recommendation to do and we want to be on record how

4 we feel about that. And we normally, I can tell

5 you, don't do that, but that's how important this

6 is. That the people of Salem County are protected,

7 that they have a top flight hospital, an acute care

8 hospital. It's heartbreaking to see what's going on

9 down there and if this hospital and when John led

10 the effort to get CHS to make the first for-profit,

11 we were in a situation where we wouldn't have had a

12 hospital, there wouldn't have been a hospital within

13 40 minutes of the major population of the city, I

14 mean, of the county. So, other than Delaware, and

15 so, like I said, we need this facility. We're happy

16 Prime has taken an interest and they're moving

17 forward, but we also need to make sure the resources

18 stay with the hospital.

19 MS. OLSZEWSKI: Thank you. Yes,

20 Ellsworth?

21 MR. HAVENS: So, just as a

22 follow-up, I mean, this is putting the cart before

23 the horse, so to speak, since we haven't approved

24 the application yet.

25 SENATOR SWEENEY: We appreciate you


18

1 allowing us to do this. We're the cart before the

2 horse.

3 MR. HAVENS: So, putting the horse

4 and the cart back in line, so we would then make a

5 recommendation post the vote on the application?

6 MS. OLSZEWSKI: I would say we need

7 to, what I would suggest is, we, when staff gives

8 their presentation, we can ask staff about this

9 particular issue and how it relates to what our

10 roles and responsibilities are and how it would be

11 handled; okay? There's a question about what's

12 under our purview and what isn't, so I think we need

13 to address that.

14 MR. HAVENS: That's what I'm

15 saying. Clearly it's not a condition on the C of N,

16 because it's not attached directly to the applicant,

17 per se. Correct me if I'm wrong; correct?

18 ASSEMBLYMAN BURZICHELLI: We are

19 asking that as a condition of this transaction

20 reflect what we have presented.

21 MR. HAVENS: Right. But, it's a

22 condition of the transaction, but not of the C of N.

23 That's what I'm --

24 MS. OLSZEWSKI: The question is

25 where would that condition go, yes.


19

1 MR. HAVENS: That's my question.

2 SENATOR SWEENEY: But, we took this

3 so, as serious as to work with the Governor and the

4 Attorney General to get the statute put in place to

5 absolutely deal with, not just this hospital, but

6 others going forward, because we knew this could be

7 an issue.

8 MS. OLSZEWSKI: We appreciate that.

9 Thank you so much for being here.

10 SENATOR SWEENEY: Thank you so

11 much.

12 MS. OLSZEWSKI: Anyone else? Since

13 we're out of sequence here, we might as well

14 continue with the rest of the public, public comment

15 presentation. Normally we would do three minutes

16 also for speakers.

17 So, the next, first person actually

18 on the list is Ryan, is it Joelene or Joelene? I'm

19 sorry. Could you please come forward and state

20 your, state and spell your name?

21 MS. RYAN: Good morning. My name

22 is Joelene Ryan. The spelling is J-O-E-L-E-N-E,

23 last name, R-Y-A-N.

24 So, I'm here this morning to oppose

25 the certificate of need and to speak out, to tell


20

1 you the reasons why I am opposing the need. First,

2 I would like to tell you how I came to be here.

3 I was a nurse at the Memorial

4 Hospital of Salem County. I worked in the ICU.

5 After my 90-day probationary period was up, I was a

6 relatively new nurse there, I gave up a position at

7 another hospital to come work there. I spoke out

8 about Prime short staffing and I identified other

9 deficiencies. It was when I spoke out about Prime

10 short staffing that I immediately experienced

11 retaliation. I received unwarranted disciplines. I

12 was wrongfully terminated. And I have been, the

13 last six years, trying to defend my license and

14 defend my name. I have been, I've been in six years

15 in the courts.

16 The Board of Nursing, after

17 pursuing me for six years based on false allegations

18 and I have proof that the allegations are all false,

19 after six years of pursuing me and stating in their

20 findings of fact circumstances which led to

21 respondent's termination and lack of nursing insight

22 and judgment, after five years in October of 2015

23 the Board of Nursing was forced to come into

24 Appellate Court and finally admit that they never

25 investigated any of the allegations of the hospital.


21

1 I received a discipline from the Board in June of

2 2012. One month later, I received a corrected final

3 order which stated no statutory or regulatory

4 violations were found and the prior order was

5 characterized in error as a discipline.

6 I asked the Attorney General if I,

7 I asked her what I should, how I should respond if

8 I've been asked if I have, was ever disciplined and

9 she responded, because of the corrected order you've

10 never been disciplined. So, consequently, I asked

11 the Attorney General, would you please remove my

12 disciplines from public record so that I can get a

13 job. She agreed to do that immediately and said

14 that my disciplines would be removed from the

15 telephone verification line within days and that she

16 would work on removing it from the multiple other

17 places that they are listed.

18 After a month and they were not

19 removed, I called the Attorney General's attention

20 to the statute, which says if there is no cause for

21 a discipline that all records shall be kept

22 confidential. Well, because the Board of Nursing

23 already posted on the internet very derogatory and

24 prejudicial comments about me without any

25 investigation and I had pointed out that they had


22

1 already broken the law by posting that without any

2 investigation and without any confirmation of those

3 facts, I immediately received another discipline

4 from the Board of Nursing. In between the two

5 disciplines my license was left active and

6 unrestricted and it was suspended after the second

7 discipline.

8 I'm multi-skilled. I cannot get a

9 job anywhere. I'm homeless and I'm sleeping in my

10 car all because of false allegations from the

11 Community Health Systems organization. This is how

12 they proceed. They are famous for union busting

13 activities all across the country. The NLRB is

14 prosecuting seven cases across the country against

15 Community Health Systems. And they did the same

16 thing to Nurse Ann Wade exactly as they did to me

17 under the same circumstances. She had the NLRB

18 represent her. The NLRB is now arguing on statute

19 of limitations.

20 MS. OLSZEWSKI: Your time is up.

21 So, can you please quickly tell us for this

22 particular certificate of need application what's

23 your --

24 MS. RYAN: Well, I would just like

25 to identify the fraud and corporation within this


23

1 corporation.

2 MS. OLSZEWSKI: Within CHS? Which

3 corporation?

4 MS. RYAN: Within Community Health

5 Systems.


7 MS. RYAN: In 2007 they fired

8 their, terminated their chief nursing officer after

9 he filed a suit when he lost one of his twins born

10 in the hospital. He filed a suit and he was fired.

11 Hostile take over, 2011, attempted hostile takeover

12 of tenant, Hahnemann University Hospital. They were

13 ordering their ER physicians to admit 50 percent, at

14 least 50 percent of their patients. Medicare fraud.

15 Medicaid fraud. Stolen medical records. Justice

16 department investigation into the false claims that

17 they agreed to pay $98 million in restoration.

18 NLRB has multiple suits against

19 them at this time and even one, initiated a new one

20 last year with the lowest suit settled for $75

21 million. There's even a website dedicated just to

22 CHS watch.


24 MS. RYAN: These are the reasons --

25 MS. OLSZEWSKI: I'm sorry. Your


24

1 time, your time is up for public.

2 MS. RYAN: Okay. Well, I feel that

3 the funds that are in the foundation should be

4 returned to the residents of Salem County. If those

5 funds, I'm not aware, does anyone know if those

6 funds are going to be used in the purchase sale, in

7 the sale of the hospital?

8 MS. OLSZEWSKI: We will speak with

9 staff about that. The information we have is that

10 the foundation is not part of this transaction.

11 MS. RYAN: If the funds are used --

12 MS. OLSZEWSKI: This certificate of

13 need that we are looking at.

14 MS. RYAN: -- to purchase the

15 hospital, those funds are going to be taken from

16 Salem County and go back into the pocket of the

17 for-profit corporation, which seems to be illegal.

18 MS. OLSZEWSKI: Okay. So, okay.

19 So, we, we're not actually going to do a back and

20 forth on this, but we're not here to answer your

21 questions. You're here to answer our questions.

22 Does anyone have any questions of this speaker?

23 Anyone? Okay. Thank you for your input.

24 MS. RYAN: And, also, the status of

25 the union, the union was approved five years ago. I


25

1 was fired on the day that the union was approved.

2 These nurses have been trying to get a contract for

3 five years. It is unknown to me if any contract

4 made by CHS will be binding on the buyer hospital

5 and my biggest fear is that these nurses are

6 attempting to unionize not because of salaries, but

7 because of patient safety issues. They're

8 chronically under staffed which endangers patients.

9 MS. OLSZEWSKI: Okay. Thank you

10 for your input. Really, your time, I have given you

11 ample time to give us information. So, unless

12 somebody else --

13 MS. HERNANDEZ: Do you have written

14 material you'd like to hand in?

15 MS. RYAN: Pardon me?

16 MS. HERNANDEZ: Do you have written

17 material you'd like to hand in?

18 MS. RYAN: No. I'd just like to

19 point out that Prime Healthcare owns 38 hospitals.

20 Only seven of them are nonprofit. Should --

21 MS. OLSZEWSKI: Okay. I'm sorry.

22 We know all that. We have looked, we really.

23 MS. RYAN: Is there any guaranty

24 that this hospital will remain nonprofit? Are there

25 any provisions?


26

1 MS. OLSZEWSKI: We have given you

2 ample time. You're welcome to stay in the meeting

3 and see what occurs after this, but thank you for

4 your input.

5 Okay. The next speaker was Dan

6 Bevers? Beavers?

7 MR. BEAVERS: I'll pass at this

8 time.

9 MS. OLSZEWSKI: Pardon?

10 MS. HERNANDEZ: You're passing?

11 MR. BEAVERS: We thought that was a

12 sign-in sheet.

13 MS. HERNANDEZ: Okay. All right.

14 No.

15 MS. OLSZEWSKI: Okay. Was there

16 anybody else here for public comment?

17 Okay. I guess we will proceed to

18 the next part of our agenda, which is the Department

19 presentation.

20 Excuse me. Before you start, John,

21 I should mention that Mickey Gross did show up, so

22 he's also here.

23 MR. GROSS: And I parked in the

24 right parking spot, I want everyone to be aware.

25 MR. CALABRIA: Thank you, Ms.


27

1 Olszewski and good morning to Members of the Board.

2 As you can see, the application and the staff

3 recommendations of the staff of the Department is

4 recommending that this application be approved. We

5 have looked at this and we believe that they have

6 documented compliance with all statutory and

7 regulatory criteria.

8 The reasons that we recommend the

9 approval include, number one, the applicant states

10 that both Prime Salem, the buyer, and CHS, the

11 seller, agree that the only available option to the

12 transfer is the closure of the hospital, which was

13 considered and determined to be an unacceptable

14 option in view of the absence of the available

15 services in the area.

16 Number two, Prime Salem states that

17 its commitment to continuing to operate Salem

18 Hospital as a general hospital with no disruption in

19 services, no reduction of services and at the same

20 level of licensed beds and services as current. The

21 staff agreed that the maintenance of this hospital

22 with its current complement will positively impact

23 the Salem service area community with no negative

24 impact on other nearby hospitals.

25 Number three, the applicant has


28

1 committed to hire substantially all the individuals

2 who are employed by Salem Hospital at this time, at

3 the time of the closing of the transfer.

4 Four, Prime Salem has stated that

5 it will maintain all of the existing charity care

6 policies currently in place at the hospital and that

7 it will continue to ensure access to quality

8 healthcare services to the Salem community without

9 regard to patient's abilities to pay.

10 And, five, the applicant complies

11 with the Department's general transfer of ownership

12 criteria. There is a willing buyer and a willing

13 seller. The buyer has presented a financially

14 feasible project and the buyer has an acceptable

15 track record.

16 Now, as you can see, we placed a

17 number of conditions. Many of you may recognize

18 these conditions from those that were placed on the

19 for-profit Prime Healthcare Services that purchased

20 three hospitals in north Jersey, St. Mary's, St.

21 Clare's and St. Michael's. Many of the conditions

22 will be applicable here. Obviously some of these

23 conditions that were placed on the north that were

24 applicable to the north. There were a couple that

25 were applicable to Essex County. Newark, for


29

1 example, obviously, aren't included in here.

2 The conditions include some general

3 conditions. The first condition is, the applicant

4 shall file a licensing application to execute the

5 transfer ownership of the assets.

6 Number two, the applicant agrees to

7 retain substantially all of the current employees at

8 the hospital. Six months after licensing Prime

9 Salem shall document to the Division of CN licensing

10 the number of full-time, part-time and per diem

11 employees retained and provide the rationale for any

12 work force reduction.

13 Number three, within 60 days of

14 licensing the applicant shall notify the Division in

15 writing of the individual who is responsible for the

16 safekeeping and accessibility of all Salem

17 Hospital's patient medical records, both active and

18 stored, in accordance with law and regulation.

19 Four, within 12 months of licensing

20 and annually thereafter for five years, Prime Salem

21 shall provide the Division with a written report

22 detailing: A, its plans to reduce unnecessary and

23 duplicated services and excess inpatient beds, if

24 any; B, its plan for addressing the need to expand

25 or add ambulatory care services; and C, capital


30

1 improvement plans, including physical plant

2 improvements, equipment upgrades and additions,

3 including IT, and other capital projects.

4 Five, Prime Salem shall invest in

5 programs designed to improve public health,

6 community health services, health and wellness and

7 within 12 months of licensing shall provide the

8 Division with a written sustainability plan

9 detailing how it intends to ensure the financial

10 viability of such programs. Prime Salem's

11 investment in such programs shall be coordinated

12 with its development and implementation of the

13 Community Health Needs Assessment referenced in

14 other conditions as well.

15 Number six, Prime Salem shall

16 operate Salem Hospital for at least a five-year time

17 period as a general hospital from the effective date

18 of the license of Prime Salem as a licensed operator

19 of the hospital. This condition shall be imposed as

20 a contractural condition of any supplement sale or

21 transfer subject to appropriate regulatory legal

22 review by Prime Salem within its five-year time

23 period.

24 Seven, Prime Salem shall operate

25 the hospital as a general hospital in compliance


31

1 with all regulatory requirements. Any changes

2 involved in either a reduction or relocation out of

3 Salem's current service area or elimination of

4 clinical services or community health programs

5 offered by Salem Hospital's former ownership shall

6 require a prior written approval from the Department

7 and shall be subject to all statutory and regulatory

8 requirements.

9 Eight, as noted in the CN

10 application, Prime Salem shall continue all clinical

11 services currently offered at the hospital and for

12 Salem Hospital patients. Any changes in this

13 commitment involving, again, either a reduction,

14 relocation out of the service area or elimination of

15 clinical services offered by the hospital shall

16 require prior written approval from the Division and

17 shall be subject to all applicable statutory and

18 regulatory requirements.

19 Number nine, Prime Salem shall

20 continue compliance with regulation which requires

21 that all hospitals provide on a regular and

22 continuing basis outpatient and preventative

23 services, including clinical services for the

24 medically indigent for those services provided on a

25 inpatient basis. Documentation of the compliance


32

1 shall be submitted within 30 days of the issuance of

2 the license and quarterly thereafter for a period of

3 five years.

4 Number ten, in accordance with

5 statute and regulation, Salem Hospital shall not

6 only comply with Federal Emergency Medical and

7 Active Labor Act, EMTALA, requirements, but also

8 provide care for all patients who present themselves

9 in the hospital without regard to their ability to

10 pay or payment source and shall provide unimpaired

11 access to all services offered at the hospital.

12 11, the value of indigent care

13 provided by hospital shall be determined by the

14 dollar value documented in charity care, calculated

15 at the prevailing Medicaid rate, and shall not be

16 limited to the amount of charity care provided

17 historically by Salem Hospital.

18 Number 12, within 60 days of

19 licensing, Prime Salem shall establish a local

20 governing board for the hospital responsible for:

21 A, representing the hospital in the community and

22 taking into account the views of the community in

23 its deliberations; B, participating in Prime Salem's

24 community outreach programs; C, supervising the

25 hospital's charity care policies and practices; D,


33

1 monitoring financial indicators and benchmarks; E,

2 monitoring quality of care indicators and

3 benchmarks; and, F, developing and implementing a

4 Community Health Needs Assessment that aligns itself

5 with Healthy New Jersey 2020, the State's health

6 improvement plan and health promotion and disease

7 prevention agenda for the decade.

8 The local governing board shall

9 adopt bylaws and maintain minutes of monthly

10 meetings. Prime Salem shall submit to the Division

11 on a quarterly basis a current working description

12 of this board's authority, roles and

13 responsibilities, governance authority and shall

14 clearly define those in comparison to its working

15 relationship with the national Prime Healthcare

16 board. On an annual basis Prime Salem shall provide

17 the Division with the local governing board's roster

18 and advise the Division of any significant changes

19 to the local governing board's policies,

20 composition, governance authority and board

21 appointments made during each year that the hospital

22 is in operation. The local board shall maintain

23 suitable representation of the residing population

24 of the service area who are neither themselves

25 employees of nor related to employees or owners of


34

1 any parent, subsidiary corporation or corporate

2 affiliate. A member of the advisory board

3 established pursuant to condition, it says 16, it

4 should be 18, shall be an ex-officio member of the

5 local governing board.

6 Number 13, within 30 days of the

7 licensing, Prime Salem shall provide the Division

8 with an organization chart of the hospital and the

9 service that shows lines of authority,

10 responsibility and communication between Prime

11 Healthcare and hospital management and the local

12 governing board.

13 14, every 12 months for the next

14 five years, starting on the date a license is issued

15 to Prime Salem, Prime Salem shall report to the

16 Division the progress on the implementation and

17 measured outcomes of the following initiatives noted

18 in the application to improve the operational

19 efficiency and quality of care at Salem Hospital and

20 shall present the most current report to the public

21 at the hospital's annual public meeting.

22 This includes: A, negotiations

23 with health insurers on new contracts to increase

24 better access for patients in the hospital; B,

25 efforts to fill service gaps to actively recruit new


35

1 physicians and encourage those physicians that

2 previously utilized the hospital to once again

3 return to provide care, and this was an issue at the

4 public hearing; C, the plan to work in conjunction

5 with community leaders and their own medical staff

6 as well as surrounding hospitals to identify

7 healthcare needs for more specialized services and

8 recruit appropriate medical staff to fill any

9 service gap.

10 D, plans to increase the

11 operational efficiencies of the emergency department

12 by decreasing wall time, that is the time paramedics

13 and EMTs are required to wait in the ED, to increase

14 overall community access; E, plans to implement a

15 community outreach program to provide more

16 accessible primary care in an effort to change the

17 community culture of using the ED as a primary care

18 provider, thereby allowing that department to

19 function as it is intended for the delivery of

20 emergency care; F, plans to expand outpatient

21 services and reduce or eliminate duplicative

22 services and any excess beds.

23 15, within 90 days of licensure

24 Prime Salem shall develop and participate in a

25 community advisory group or CAG to provide ongoing


36

1 community input to the hospital's CEO and the

2 hospital's local governing board on ways that Prime

3 Salem can meet the needs of the residents in the

4 service area. This would include participating in

5 the development and the updating of the Community

6 Health Needs Assessment I referred to earlier.

7 A, Prime Salem shall determine the

8 membership, structure, governance, rules, goals,

9 timeframes and the role of the CAG in accordance

10 with the primary objectives set forth above and

11 within 60 days from the date of the formation of the

12 CAG shall provide a written report setting forth

13 that information to the hospital's local governing

14 board with a copy to the Division and subject to the

15 Department's approval. B, Prime Salem may petition

16 the Department to disband the CAG not earlier than

17 three years from the date of licensing and on a

18 showing that all of the requirements in this

19 condition have been satisfied for at least one year.

20 Condition 16, for the initial five

21 years following the transfer, Prime Salem shall

22 submit annual reports to the Division detailing: A,

23 the investments that it has made from the previous

24 year in the hospital. Such reports shall also

25 include a detailed annual accounting of any long- or


37

1 short-term debt or other liabilities incurred on the

2 hospital's behalf and reflected on the Prime Salem

3 balance sheet. B, the transfer of funds from the

4 hospital to any parent, subsidiary corporation or

5 any corporate affiliate. Such report shall also

6 detail the amount of funds transferred in order to

7 document that assets and profits reasonably

8 necessary to accomplish the healthcare purposes

9 remain with the hospital. Transfer of funds shall

10 include, but not be limited to, assessment for

11 corporate services, transfers of cash and investment

12 balances to centrally controlled accounts,

13 management fees, capital assessments and/or special

14 one time assessments for any purpose.

15 C, all financial data and measures

16 required pursuant to regulation N.J.A.C. 8:31B and

17 from the financial indicators monthly reporting.

18 And, finally, D, a list of completed capital

19 projects itemized to reflect both the project and

20 its expenditure.

21 Condition 17, within 15 days of

22 approval Prime Salem shall provide a report to the

23 Division detailing its plans for communications to

24 Salem Hospital's staff including, but not limited

25 to, elected officials, clinical practitioners and


38

1 EMS providers concerning the approval of the

2 transfer of the license and the availability of

3 fully integrated comprehensive health services.

4 MS. OLSZEWSKI: John, would you

5 like to have a sip of water?

6 MR. CALABRIA: Number 18, Prime

7 Salem shall agree to take steps to ensure

8 transparency, provide quality care to patients and

9 provide assurances to the Department of its

10 continued financial viability. Prime Salem shall

11 designate an advisory board which shall be comprised

12 of at least three individuals. Three individuals

13 shall be selected by the hospital and two

14 individuals may be selected by the Commissioner

15 himself.

16 The advisory board shall meet

17 quarterly to: A, review and assess Prime Salem's

18 compliance with capital commitment; B, evaluate

19 Prime Salem compliance with charity care policy; C,

20 evaluate Prime Salem's compliance with ethical and

21 religious directives; D, evaluate Prime Salem's

22 compliance with the maintenance of any pastoral

23 services; and, E, review and assess Prime Salem's

24 compliance with State and Federal laws, statutes,

25 regulations, administrative rules and directives and


39

1 the impact on community healthcare access and

2 quality and all conditions in any approval letter

3 and report such findings to the Department.

4 Department staff may attend meetings of the advisory

5 board.

6 Prime Salem shall agree to release,

7 discharge and hold harmless members of the advisory

8 board from any and all claims, liability demands,

9 causes of action or suits that may be made by or on

10 behalf of Prime Salem, direct and indirect parent

11 company, direct and indirect subsidiary companies,

12 companies under common control with any of the

13 foregoing affiliates and assigns, and all persons

14 acting by, through, under or in concert with them

15 that arise out of or are incidental to acts,

16 omissions or reports issued in good faith by the

17 advisory board in accordance with this condition.

18 This release shall not apply, shall not apply to any

19 loss, damage, liability or expense incurred as a

20 result of any unlawful or malicious acts or

21 omissions by any member of the advisory board.

22 The advisory board shall: 1, be

23 independent of any Prime entity, having no current

24 or previous familial or personal relationships to

25 any Prime entity, its principals, board members


40

1 and/or managers or entities owned by any Prime

2 entity in whole or in part and, 2, shall be

3 acceptable to the Department. A member of the

4 advisory board shall serve as ex-officio, nonvoting

5 member of the local governing board referenced above

6 in Condition 12.

7 The advisory board shall monitor

8 the following and these findings shall be reported

9 semiannually in writing to both the hospital's local

10 governing board and the Department: Levels of

11 uncompensated care for the medically indigent;

12 emergency department admissions; provision of clinic

13 services; compliance with standard practices

14 relating to coding and diagnoses; rationale for

15 termination of insurance contracts; insurance

16 participation and policies related to out-of-network

17 charges; compliance with the Department licensing

18 requirements related to staffing ratios and overtime

19 and the Department of Labor and Work Force

20 Development Wage and Hourly requirements; and,

21 finally, compliance with all of their CN conditions

22 within the required timeframes required by each

23 condition.

24 Prime Salem shall provide

25 information to the advisory board upon request and


41

1 in the form requested. The advisory board shall be

2 active for a minimum period of at least two years

3 and shall provide all the reports, findings,

4 projections and operational or strategic plans to

5 the Department and Prime Salem local governing board

6 for assessment. In the event Prime Salem does not

7 fulfill the commitments set forth in this condition,

8 the failure may be considered a licensing violation

9 subject to penalty.

10 19, Prime Salem shall post on the

11 hospital's website annual audited financial

12 statements within 180 days of the close of the

13 hospital's fiscal year and shall post any unrelated

14 financial statements within 60 days of the close of

15 the hospital's fiscal quarter. All annual and

16 quarterly statements shall be prepared in accordance

17 with generally accepted accounting principles. With

18 respect to the posting of quarterly unaudited

19 statements, Prime Salem may include disclaimer

20 language regarding the unaudited nature of the

21 financial statements on its website where such

22 statements are posted.

23 Within 60 days of the posting of

24 its audited financial statements to its website,

25 Prime Salem shall hold an annual public meeting in


42

1 New Jersey pursuant to the statute and shall make

2 copies of these audited annual financial statements

3 available at the annual public meeting. The

4 advisory board referenced above shall be invited to

5 attend the annual public meeting to hear concerns

6 expressed by community members. Prime Salem shall

7 develop mechanisms for the meeting that address: A,

8 an explanation in layperson's terms of the audited

9 annual financial statement; B, an opportunity for

10 members of the local community to present their

11 concerns to Prime Salem and the advisory board

12 regarding local healthcare needs and hospital

13 operations; C, a method for Prime Salem to

14 publically respond in layperson's terms to the

15 concerns expressed by community members at the

16 annual public meeting; and, D, Prime Salem shall

17 develop these methods, A through C, within 90 days

18 of the date of this approval letter and provide them

19 to the Division.

20 Number 21, after the transfer is

21 implemented, Prime Salem shall use its commercially

22 reasonable best efforts to negotiate in good faith

23 for in-network HMO and commercial insurance

24 contracts with commercially reasonable rates based

25 on the rate that HMOs and commercial insurance


43

1 companies pay to similarly situated in-network

2 hospitals in the southern New Jersey. You see we

3 have northern. I told you we took a lot of these

4 conditions from the north.

5 B, Prime Salem shall convene

6 periodic meetings with the Department and the

7 Department of Banking and Insurance, DOBI, to review

8 and evaluate all issues arising in contract

9 negotiations within the first year of licensure and

10 provide written documentation to the Department on a

11 monthly basis during that first year which shall

12 include, but not be limited to, a description of the

13 number and subject of telephone calls,

14 correspondence and meetings with the existing HMO

15 and commercial insurance carriers, as well as

16 follow-up telephone calls, correspondence and

17 meetings. At a minimum, Prime Salem shall have

18 monthly contact with existing HMO and commercial

19 insurers. If the existing HMO and commercial

20 insurers fail to respond to requests for

21 negotiations, then Prime Salem shall notify the

22 Department and no need to request assistance.

23 C, within ten days of licensure,

24 Prime Salem shall post on the hospital's website the

25 status of all insurance contracts related to patient


44

1 care between the hospital and insurance plans,

2 including all insurance plans with which Prime Salem

3 contracted at the time of submission of the CN

4 application, April of 2013, excuse me, 2016. Prime

5 Salem shall also provide notices to patients

6 concerning pricing and charges related to coverage

7 during termination of plans.

8 D, within the first year of

9 licensure, Prime Salem shall notify the Department

10 of the status of notices to terminate any HMO or

11 commercial insurance contracts that will expand

12 out-of-network service coverage. Prime Salem shall

13 meet with representatives from the Department and

14 DOBI to discuss the intent to terminate such

15 contract, willingness to enter into mediation, and

16 shall document how it will provide notice to

17 patients and providers, as well as the impact that

18 such action is reasonably expected to have on access

19 to healthcare.

20 During the first year from the date

21 of licensure, Prime Salem shall report to the

22 Department for each six-month period the hospital's

23 payer mix and the number and percent of total

24 hospital admissions that came through the emergency

25 department. For four years thereafter, Prime Salem


45

1 shall report the aforesaid information to the

2 Department on an annual basis.

3 Number 22, in accordance with the

4 provisions of the statute, Prime Salem shall offer

5 to its employees who are affected by the transfer

6 health insurance coverage at substantially

7 equivalent levels, terms and conditions to those

8 that were offered to the employees prior to the

9 transfer. This condition does not prohibit good

10 faith contract negotiations in the future.

11 23, Prime Salem shall maintain

12 compliance with the United States Department of

13 Health and Community Services Standards for

14 Culturally and Linguistically Appropriate Services

15 in Health and Healthcare. Compliance shall be

16 documented and filed with the Division with annual

17 licensing renewal.

18 Number 24, for at least five years

19 Prime Salem shall not enter into any contract or

20 other service or purchasing arrangements or provide

21 any corporate allocation or equivalent charge to

22 affiliated organizations within Prime, except for

23 contracts or arrangements to provide services or

24 products that are reasonably necessary to accomplish

25 the healthcare purposes of the hospital and for


46

1 compensation that is consistent with fair market

2 value for the services actually rendered or the

3 products that are being provided.

4 25, Prime Salem shall submit any

5 proposed plan including documented compliance with

6 law and regulations as it relates to out-of-network

7 cost sharing with patients to DOBI prior to any

8 implementation. Prime Salem shall not implement any

9 out-of-network cost sharing plans if DOBI objects

10 thereto.

11 Number 26, Prime Salem shall comply

12 with the requirements of the Department of Labor and

13 Work Force Division of Wage and Hour Compliance that

14 address conditions of employment and the method and

15 manner of payment of wages.

16 27, prior to licensing Prime Salem

17 shall identify a single point of contact to report

18 to the Division concerning the status of all these

19 conditions within the timeframes noted.

20 And, finally, all of the conditions

21 shall apply to any successor organization to Prime

22 Salem who acquires Salem Hospital within five years

23 from the date of CN approval.

24 It's a lot of conditions to read.

25 Thank you for your consideration. But, these


47

1 conditions, I mentioned before, were placed on other

2 Prime hospitals and acquisitions. So, I'm sure, and

3 Prime is currently complying with the conditions on

4 placement of those, so we're satisfied with that.

5 And, again, the Department believes that this is,

6 again, a willing buyer, willing seller and we

7 believe along with that and the speaker before that

8 without this acquisition there is a possibility this

9 hospital can close. I think that's appropriate for

10 this area. I'll be happy to try to answer any

11 questions.

12 MS. OLSZEWSKI: Okay. Thank you,

13 John. Once again, thank you and your staff for all

14 of the fine work you've done in pulling this

15 together and clearly, you know, you do a lot of

16 groundwork to make our jobs a lot easier as we said.

17 MR. CALABRIA: I have an excellent

18 staff.

19 MS. OLSZEWSKI: Just a

20 clarification for me is, with the purchase, would

21 Salem Hospital then be a not-for-profit?

22 MR. CALABRIA: Yes.

23 MS. OLSZEWSKI: Go from a --

24 MR. CALABRIA: This is a

25 not-for-profit, the whole Prime.


48

1 MS. OLSZEWSKI: I thought so. It's

2 going to the Prime Foundation. Okay. Thank you.

3 In reference to what the speakers, the State

4 Assemblyman and Mr. Burzichelli said to us, is the

5 foundation, the health and wellness foundation,

6 within our purview to deal with at all? I'm not

7 sure how that is supposed to be handled.

8 MR. CALABRIA: Staff doesn't

9 believe it is and it's not part of this application.

10 And, so, does that answer your question?

11 MS. OLSZEWSKI: Their request was a

12 condition or to put something in a recommendation,

13 but it's not clear to me that that's part of our

14 responsibilities here.

15 MR. CALABRIA: We obviously saw

16 Senator Sweeney's letter to the members of the Board

17 and we took it very seriously and the staff looked

18 into that. And we found that, and I believe they

19 mentioned the, statute NJSA 26:2H-7.11H4. It's part

20 of that. It is part of the statute and it basically

21 says, there's a statutory process. It says the

22 issues raised in that letter and that process

23 involves, as they mentioned, the Attorney General's

24 office and the Superior Court and the statute

25 actually addresses this very case.


49

1 If you have a nonprofit, which

2 Prime Salem is, buying a facility from another

3 acquired entity that was a not-for-profit, that they

4 would, first for-profit, though, Salem was

5 not-for-profit, in 2002 it was a for-profit,

6 Community Health System purchased the hospital and

7 now it's being purchased by a not-for-profit and

8 there's a system by law which allows the Attorney

9 General and the Superior Court to determine what

10 those foundation assets, how they should be used.

11 And the Board can certainly ask the applicant if

12 they're willing to take steps that are authorized by

13 that statute to look into that.

14 MR. GROSS: My question would be,

15 excuse me, Ms. Chairman.

16 MS. OLSZEWSKI: Please.

17 MR. GROSS: Is it appropriate for

18 this Board that we would actually have language in

19 there that the foundation transfer of funds would be

20 approved by the Attorney General's office? Is that

21 something that would, we could put in there or not

22 put in there? I'm looking at our Deputy

23 Commissioner. Susan, is that something we cannot

24 put in there?

25 MS. DOUGHERTY: Assistant


50

1 Commissioner. If you're asking, do we have the

2 authority, we the Department of Health, to tell the

3 Attorney General what they should do?

4 MR. GROSS: No, but recommend that

5 they have, that this thing be subject to the

6 approval from the Attorney General's office.

7 MS. DOUGHERTY: It's in the statute

8 what the process is. So, the Board can certainly,

9 as John said, the Board can certainly ask the

10 applicant if they would be willing to go through

11 that process in accordance with the statute.

12 MR. GROSS: Okay.

13 DR. ALAIGH: Just a follow-up to

14 this, could we add something like, you know, a

15 recommendation to evaluate this proposition in

16 conjunction? So, it's not telling them to do it,

17 but a condition that says a thorough and

18 comprehensive evaluation of a transfer of foundation

19 funds to the hospital or something like that?

20 MS. DOUGHERTY: We normally don't

21 put in a condition that requires them to think about

22 something, which is essentially what you're saying.

23 Normally our conditions are much more expressed so

24 that they know how to comply with them.

25 MR. CALABRIA: Yes, I agree. The


51

1 staff thought that this is outside the purview of

2 the Department. It certainly has been mentioned

3 that the applicant can go to the Attorney General

4 and Superior Court if they'd like, but I don't know

5 what role the Department of Health would have, the

6 CN would have.

7 MS. OLSZEWSKI: And the request for

8 a special master or a special administrator.

9 MS. DOUGHERTY: There's a process

10 in the statute that tells people how to do it.

11 MS. OLSZEWSKI: Okay. Yes?

12 MS. BENTLEY-MCGHEE: Connie McGhee

13 here in the room. I have a, I don't know what you

14 call it, just a way of listening to certain things

15 and I heard the speaker, I think it was a woman,

16 speaking about allegations of maybe a grievance or

17 fraud or what have you. So, I was listening to see

18 how, if you're aware of something, what it is that

19 you would do at this juncture? And I realize, I'm

20 not asking you the ifs in the future or to think

21 about, but I'm asking for, like, right now, when you

22 hear that there may be issues, what is it that you

23 can recommend or would it be an advisory board

24 determination? I'm just not sure. I'm not clear

25 and --


52

1 MR. CALABRIA: Can you be more --

2 MS. BENTLEY MCGHEE: I'm

3 probably --

4 MR. CALABRIA: -- one of the

5 previous speakers?

6 MS. BENTLEY MCGHEE: I heard a

7 speaker talk about allegations, Joelene Ryan I

8 believe was the name, and I couldn't quite hear all

9 of it and so I didn't ask any questions while I was

10 in the car, because I wasn't sure of everything that

11 she had said. But, I did hear a whisper of some

12 kind of a grievance and a labor issue and money

13 issues regarding fraud or what have you. So, I'm

14 wondering, when things like that surface, what is it

15 that the Department can do to investigate or to

16 determine there is no issue? I'm just not sure, you

17 know.

18 MR. CALABRIA: I don't think that

19 the Department has a role in, if what I'm hearing

20 you say and, I'm sorry, I had to step out for a

21 minute when that one speaker, when she was here.

22 When I came back in --

23 MS. BENTLEY-MCGHEE: We both

24 recused ourselves. Okay.

25 MR. CALABRIA: -- I think it's an


53

1 issue she has with National Labor Relations Board,

2 maybe the Department of Labor, the Board of Nursing.

3 MS. OLSZEWSKI: It was CHS.

4 MR. HAVENS: CHS.

5 MR. CALABRIA: The seller in this

6 case. So, it's nothing to do with this particular

7 application for Prime Salem. So, you know, I think

8 that that Department and the CN process, maybe

9 unfortunately, has really little to do with what her

10 concerns are.

11 MS. BENTLEY-MCGHEE: So, basically,

12 she was just speaking not in favor of the transfer

13 based upon her relationship.

14 MR. CALABRIA: I think, it was hard

15 for me to understand, she sounded like she was

16 speaking against the seller, but, you know.

17 MS. OLSZEWSKI: John, I have a

18 question about a point that Ms. Ryan brought up that

19 was also mentioned in the public meeting, which was

20 about the, there's a nurse's union issue, that in

21 the past we haven't dealt with union issues as part

22 of the certificate of need process. Is that also

23 out of our purview, so to speak?

24 MR. CALABRIA: Yes, the staff

25 believes that is. We have no authority of


54

1 management with labor relations in any healthcare

2 facility, in any of the hospitals.

3 MS. OLSZEWSKI: Thank you.

4 MR. CALABRIA: Our only goal would

5 be if there's issues that we do have responsibility

6 to assure quality is still maintained in the

7 facility.


9 Other questions?

10 MR. KANE: No thanks.

11 DR. ALAIGH: I'll go last.

12 MS. OLSZEWSKI: You want to go

13 last.

14 DR. BARONE: I just want to

15 follow-up. I just want to follow-up on a comment

16 that was made earlier by Dr. Alaigh in terms of the

17 whole issue of foundations and how they manage money

18 and sometimes depending on how it is structured it

19 might be impossible to. So, just, basically, one,

20 well, two questions. One is, the money that is in

21 those foundations has no bearing at all on the sale.

22 There's no contingency at all?

23 MR. CALABRIA: Not as far as the

24 application. The applicant is paying for this, if

25 you will, through available cash.


55

1 DR. BARONE: And also based on, it

2 sounds like what the political leadership is saying,

3 which seems like we cannot do in terms of imposing

4 an additional condition. They did not state it as a

5 deal breaker. If we did not, it seems to me the

6 political leadership wants this to happen without

7 our comment on the whole issue with the foundations.

8 MR. CALABRIA: I don't want to

9 comment on that, but maybe.

10 DR. BARONE: For the Board, it

11 doesn't sound like it was linked, that if you do not

12 include this, then they do not support the sale. It

13 sounds to me like they want this to happen for the

14 community and the rest of the details will need to

15 be worked out through a regulatory mechanism. So,

16 maybe that's not directed at you.

17 MR. CALABRIA: The foundations are

18 not part of the application.

19 MS. OLSZEWSKI: And, yet, they put

20 it in the minutes. So, it's, they have made it as

21 part of this meeting, you know, that their request

22 is well known and their members of the AG's, we have

23 a representative from the Attorney General's office

24 here today.

25 MS. DOUGHERTY: Not from the


56

1 chapter.

2 MS. OLSZEWSKI: Not from that

3 chapter. Okay. But, anyway, they have actually

4 added to a public record their request.

5 MR. KANE: I think they're going to

6 make their request known to chapter as well.

7 MS. OLSZEWSKI: Okay. Other

8 questions? Ellsworth?

9 MR. HAVENS: Fine.

10 MS. OLSZEWSKI: Mickey?

11 MR. GROSS: I'm fine. Thank you.

12 MS. OLSZEWSKI: Okay. Dr. Alaigh?

13 DR. ALAIGH: So, as a follow-up to

14 my question, again, thanks so much. This was, and

15 I'll go into the overall recommendations, but just

16 to follow-up to the foundation, what would happen to

17 the foundation? So, the sale is just the hospital

18 as an asset. What would happen to the foundation

19 and how would the funds of the foundation come, how

20 would those funds service the community?

21 MR. CALABRIA: We don't know about

22 the foundation. We don't know the details about the

23 foundation. We know they're there. We don't know

24 any details, what's part of the application. So, we

25 don't regulate foundations. So, I think your


57

1 question is going to be answered when they go

2 through Superior Court and the AG's office.

3 MR. KANE: I think maybe we

4 could -- go ahead.

5 MR. HAVENS: Knowing a little bit

6 about foundations, being a president of a

7 foundation, my impression was it was a historical

8 question. So, when the last sale went through,

9 whenever, what was it?

10 MR. CALABRIA: 2002.

11 MR. HAVENS: 2000 and whatever,

12 umpteen years ago, they transferred funds from their

13 foundation to the Community Foundation of New

14 Jersey, which is located in Morristown. So, for the

15 last umpteen years Community Foundation of New

16 Jersey, which legally owns those assets, is now

17 disbursing those assets based on whatever criteria

18 was established back then. So, you know, part of

19 the legal question is, you know, Community

20 Foundation, under some agreements, owns those assets

21 and Community Foundation owns those assets and can

22 say, hey, there's no assets left. No one knows if

23 there are assets left. It's 12 years. Two, they

24 could say, there are assets, give them to us legally

25 and we are fully entitled to it. So, I think, in my


58

1 mind, there are more unknown questions than there

2 are answers at the moment and that's why I was

3 trying to get, and none of it has to do with

4 conditions on the C of N. That was, I was just

5 trying to, so it's sort of related, but not related.

6 DR. BARONE: True, true and not

7 related.

8 MR. HAVENS: Exactly. So, I guess

9 we could ask the applicant to explore, but they can

10 give a call to the Community Foundation and they

11 could say that, you know, it's ours or we've spent

12 it already or we'll work a deal or whatever, but,

13 you know, I don't know. We don't have any, we don't

14 have any legal standing to do anything.

15 DR. ALAIGH: But, could we put a

16 condition that says to do a thorough evaluation? I

17 know you're saying, Susan, that we can't. We're

18 very descriptive on what those recommendations are,

19 but could this be worded in a descriptive way, which

20 is to identify all the appropriate resources through

21 the foundation and the feasibility of bringing it

22 back to the community or something without actually

23 saying that you have to have the dollars back? At

24 least it could be descriptive in the sense of, you

25 know, just like we're doing a whole analysis and


59

1 what your plan is, similarly a thorough, you know,

2 due diligence and evaluation of the opportunity to

3 bring back the foundation dollars to the community.

4 MS. DOUGHERTY: What the leadership

5 asked for today was not that. They asked that the

6 applicant pursue the process that's in the statute.

7 So, that's a different issue and that the Board can

8 certainly ask the applicant if they would be willing

9 to explore that or if they would be willing to

10 commit to it and that would be part of the record.

11 DR. ALAIGH: Okay. Could that be

12 put in as a condition or only as part of? Because

13 the condition doesn't mean, the condition just means

14 that you're going to do it. It doesn't mean that

15 you have to deliver the result, right, because

16 there's so many variables that none of us are in

17 control of. So, I mean, that's my question. We can

18 ask the applicant, but if the applicant agrees to

19 that, can we put it as a condition and it's a

20 recommendation obviously by the Commissioner?

21 MS. DOUGHERTY: Right. It's up to

22 the Board. It would be very unusual.

23 MR. CALABRIA: I think, you know,

24 the staff has always put conditions on and as Susan

25 mentioned before, this is the way, it's a little


60

1 amorphus and even things that we think are pretty

2 straightforward sometimes have to be hard to

3 understand. I think we have difficulty in putting a

4 condition on an applicant that had nothing to do

5 with the application that was submitted.

6 MR. KANE: I'd be concerned with

7 stepping outside what our purview is and setting

8 precedence for future applicants.

9 MR. HAVENS: And I also believe

10 it's outside the applicant's control also.

11 DR. ALAIGH: Right.

12 MR. HAVENS: It's a foundation.

13 They can call the foundation and they can never

14 return a phone call.

15 DR. ALAIGH: Okay. I'm satisfied.

16 We can ask the question and put it, have it in the

17 record. Okay. Thank you.

18 So, John, the next question is, why

19 is this so comprehensive? I mean, we've been

20 through this. This is so detail oriented, the

21 conditions and so descriptive. Is there a reason

22 why we've gone, I mean, I like it, but my question

23 is, is there something that triggered this

24 comprehensive description or are we just improving

25 ourselves?


61

1 MR. CALABRIA: This is, first of

2 all, let's put the foundation separate. It's a

3 separate legal entity. The applicant here is the

4 Prime Foundation is a separate legal entity from the

5 ones that were done in north Jersey and this is a

6 separate institution. We want to be consistent in

7 our conditions and I think this is our attempt to do

8 that. Yes.

9 DR. ALAIGH: There's nothing that

10 you --

11 MR. CALABRIA: I checked with staff

12 about two weeks ago when we were preparing this and

13 they're reporting on their conditions acceptably and

14 I have no doubt that they'll do well here.

15 MS. OLSZEWSKI: So, you're,

16 basically, telling us that from here on out we're

17 going to have at least 28 conditions?

18 DR. ALAIGH: With supplements.

19 MS. OLSZEWSKI: Is that true?

20 MR. CALABRIA: Not necessarily.

21 Each application is a bit different than the others

22 and transfers of ownership back and forth between

23 profit and not-for-profit are a little more

24 complicated.



62

1 DR. ALAIGH: So, the next question

2 is, I know we said it's a five-year commitment to

3 continue the services. Now, in between the five

4 years, if things change and we know our healthcare

5 department is changing so rapidly, do they, does the

6 applicant still have, if awarded the transaction,

7 does the applicant still have the possibility of

8 coming back and saying we're going to close down a

9 unit or we're going to add a service or we're going

10 to change from acute to long term care? I mean, are

11 there those provisions within that five-year period

12 or are you only going to --

13 MR. CALABRIA: Yes, they do. They

14 do. Obviously the process is still a process for

15 all the facilities in the State.

16 DR. ALAIGH: Is there a concern

17 from a Department perspective of in terms of the

18 occupancy room rate? I know the number of licensed

19 beds are about over a hundred, but the occupancy

20 rate is about 30 to 40 percent. Is that a concern?

21 MR. CALABRIA: It's not a concern.

22 If they were trying to expand something, it might

23 be, but this is, I think is, essentially, that this

24 hospital could close. This entity came in and I

25 believe we have to give this entity an opportunity


63

1 to get licensed, study the situation, figure out,

2 you know, here's what was successful as they laid

3 out in their application. That this is one of

4 their, this is the way they do things. They take

5 hospitals that have some financial problems and make

6 them better. So, you know, the staff recommendation

7 here is it looks like without this the hospital

8 would close and that's not a good thing. They, it's

9 necessary for the area. Give these folks and

10 they're buying, acquiring an entity that has

11 occupancy rate that's based on what the seller has

12 been doing and they want an opportunity to do better

13 and that's fine.

14 DR. ALAIGH: So, you have

15 considered this a critical access facility?

16 MR. CALABRIA: I don't know if you

17 want to use that term. It is clear that this

18 hospital is some distance, and as I don't live in

19 far south Jersey, but I live in south Jersey, and

20 the east, west access is not real easy on some of

21 those roads and so I think this hospital is

22 necessary in this area.

23 DR. ALAIGH: And just going back to

24 Madam Chair's comment about the not-for-profit, is

25 there a reason why it's, is it the applicant's


64

1 choice for it to be, for it to remain a

2 not-for-profit or was this something that the

3 Department had a preference?

4 MR. CALABRIA: I think you can

5 address that to the applicant. This is the

6 application Prime Foundation submitted to you.

7 DR. ALAIGH: That doesn't change

8 our oversight in any way?

9 MR. CALABRIA: No. No.

10 DR. ALAIGH: The Department's

11 oversight?

12 MR. CALABRIA: All facilities,

13 whether profit or not-for-profit, all facilities are

14 subject to the same requirements, same licensing.

15 DR. ALAIGH: Do you have any

16 concerns around payer mix and managed care contracts

17 at this point with the --

18 MR. CALABRIA: Not at this point.

19 That's why we have those conditions in just to make

20 sure.

21 DR. ALAIGH: And how has

22 traditionally, and I know in the many, you know,

23 transactions that we've seen here, one of the

24 conditions is that if they're not successful with

25 payer negotiations that there will be, the DOH can


65

1 get together to help with that. How has that been?

2 MR. CALABRIA: It hasn't had to be

3 used that often, but in the times that I've been

4 involved with it, it's worked fairly well.

5 DR. ALAIGH: You do think this

6 model is working in the rest of the State?

7 MR. CALABRIA: Correct.

8 DR. ALAIGH: All right. That's all

9 for me.

10 MS. OLSZEWSKI: Okay. Great.

11 Thank you. Great questions. Anyone else have

12 anything? John, you know we'll ask later if we have

13 questions later, but thank you so much and I hope

14 your voice recovers.

15 MR. CALABRIA: I do, too.

16 MS. OLSZEWSKI: Okay. Now it's

17 time for the applicant's presentation. It's

18 usually, we usually allow ten minutes, but we always

19 have questions, so it will probably be longer, but

20 could you please come forward and state your name,

21 names, and spell them?

22 MR. BURKLOW: My name is Bryan

23 Burklow. Bryan with a Y, Burklow, B-U-R-K-L-O-W.

24 MS. SAVITALA: My name is Radha

25 Savitala, R-A-D-H-A, last name, S-A-V-I-T-A-L-A.


66


2 MR. BURKLOW: Well, I want to just

3 thank you for the opportunity to be before the Board

4 to ask your approval for the sale to go through on

5 behalf of Prime Healthcare. Prime now has 44

6 hospitals in 14 states. We're one of the fastest

7 growing healthcare companies. You can read about us

8 online and we have a very unique model. We've never

9 closed a hospital or sold one yet and don't intend

10 to.

11 The company was started by Dr. Prem

12 Reddy in 2001 and he really, the foundation was, he

13 had the opportunity to take over the hospital he

14 practiced at and built as a practitioner from

15 another corporation and through the principles that

16 we embrace he was able to turn that hospital around.

17 Many other companies came to him or certainly

18 hospitals in California and asked for our help and

19 the company grew from there.

20 And then in 2012 Dr. Reddy felt

21 that the principles were sound and wanted to help

22 other communities throughout the country and so we

23 embarked on a nationwide process to try to expand

24 and use our principles to help struggling community

25 hospitals. And four and a half years later we now


67

1 have over 30 hospitals we've acquired outside of

2 California. We've been recognized as a Top 15

3 National Health System by several organizations. We

4 are, we have many Top 100 Hospitals recognized by

5 Truven. Much more so than other systems our size

6 and I think what makes us really unique we're a

7 physician owned and physician led company and there

8 really is no other company like us in the country of

9 this style.

10 Our model, a lot of people ask us,

11 how do you do it. We have a lot of principles we

12 use. I'll just give you a few so you can know kind

13 of how we do it. We really greatly enhance ER

14 services, that means turnaround times for patients,

15 quality physicians, access to good patient care and

16 emergency medicine. We also look at hospitalist

17 programs so we have good doctors and we do it on a

18 cross effective basis so that we standardize care.

19 We also approve quality metrics when we go in and I

20 think that's really driven by the physician

21 leadership that we have. And we advocate for

22 patient care and rights and we don't readily accept

23 just insurance strategies to not pay us. So, I

24 think we do fight back appropriately for what's

25 right for the patients and the care that we deliver.


68

1 We give back to the communities

2 that we're in in many ways and often we keep a

3 hospital open and that is the largest employer in

4 any community that we serve. So, this is, it's a

5 good thing.

6 We're no stranger to New Jersey. I

7 mean, I think that, as John pointed out, you know,

8 we now own five hospitals, a satellite ER in Sussex

9 County and the acquisition of Memorial Hospital

10 would be our sixth facility in New Jersey. So,

11 we're excited about it and we're doing this on

12 purpose. We have successfully negotiated contracts

13 with JNESO and other nursing unions throughout the

14 State. We also, other non-nursing unions we've

15 worked with. So, we've honored our conditions. I

16 think that was mentioned. We don't take them

17 lightly. We take them very seriously in our

18 transactions. To date, we've kept substantially all

19 the employees.

20 And I think that what I wanted to

21 mention to the Board was also, in addition to that,

22 we, in most instances, we grow jobs in the State.

23 So, for example, most of, a lot of hospitals

24 outsource housekeeping, dietary and other services.

25 Typically the Prime model is we go in and eliminate


69

1 those purchase services and hire those employees on

2 the hospital payroll and keep those jobs local and

3 so that's a strategy.

4 Some of the highlights we've had

5 successfully in New Jersey, I just wanted to kind of

6 get on the record, was St. Mary's in Passaic. With

7 that acquisition, in less than two years we've

8 already invested $30 million into that struggling

9 hospital. The radiology equipment has been totally

10 replaced, new lobby. It's just a totally improved

11 facility since the day we took it over.

12 Most, more recently, St. Clare's

13 Health System that we purchased in October of '15,

14 yes, '15. Since then we've added 12 new ambulances

15 and we're about, we've ordered and we're about to

16 implement new radiation oncology equipment. All of

17 this is millions of dollars in adding to improve the

18 facilities and the services.

19 St. Michael's, which is our most

20 recent acquisition in New Jersey that, frankly, if

21 we hadn't acquired it most likely would have closed

22 since it was in bankruptcy. We've greatly improved

23 the emergency services already and just since May

24 and we're about to install a very expensive epic EMR

25 computer system, which is minimally a $4 million


70

1 investment, and we're going to embark on creating a

2 regional laboratory network based on St. Michael's

3 to service all of our facilities in New Jersey. So,

4 these are the things we're adding back to our

5 communities and the hospitals we serve.

6 With respect to the Memorial

7 Hospital at Salem, we are very interested. We feel

8 that we can implement our Prime model here and save

9 this hospital as we've saved so many. We also think

10 that, you know, we're encouraged that finally that

11 we're getting our opportunity and hopefully for

12 approval here, because, as was mentioned I think in

13 one, in the public hearing, that there are several

14 physicians and nursing staff members that have left

15 just waiting for the transaction to get approved and

16 move forward.

17 We also think there's some unique

18 opportunities in our region, because we have three

19 facilities in southeast Pennsylvania that we think

20 we can get some synergies. There's some physicians.

21 We're already talking about maybe leveraging some

22 medical staff opportunities across the river in PA

23 to bring some more doctors to New Jersey. Some of

24 the specialties are very thin in Salem County and

25 Memorial Hospital of Salem and we think that we can


71

1 enhance those services by working, you know, with

2 our sister facilities across the river in

3 Pennsylvania.

4 And I think that the other thing

5 this transaction will do is add more jobs to New

6 Jersey, because presently CHS has a billing office

7 space in Pennsylvania that does the billing services

8 for this hospital. We intend to, we will migrate

9 those jobs into New Jersey and use a New Jersey hub

10 to do the patient billing. So, create additional

11 jobs in New Jersey.

12 And one of the things we're excited

13 that we would, we would, we talk about new services

14 that we might add. We just heard that Governor

15 Christie called for some additional psych beds.

16 It's the first time in 25 years. We think this is a

17 service that's desperately needed in Salem County

18 and we would quickly look to explore the

19 opportunities for filing another C of N to try and

20 expand services if given the opportunity.

21 And as we go into a new facility,

22 we investigate all services, especially outpatient

23 services, and we feel that one of the opportunities,

24 and I think it was mentioned by several people, is

25 that a lot of the healthcare services are leaving


72

1 the community and going across the river in Delaware

2 and as good stewards, if given the opportunity, our

3 goal is to keep those services local and not have

4 them leave the State of New Jersey and cause people

5 undue hardships leaving the area and we really look

6 forward to getting approval and thank you for your

7 time.


9 You've heard John go through all the conditions,

10 which I'm sure was not the first time you heard the

11 conditions. Are you okay with the conditions?

12 MR. BURKLOW: Go ahead.

13 MS. SAVITALA: May I? In review of

14 the conditions, we do agree that many of them are

15 similar to conditions we've seen elsewhere. We did

16 have a question with regard to number seven and

17 number eight. In our view, number seven is one that

18 we see, number eight appears to be new and very

19 similar. So, we would request that number eight be

20 stricken or only to avoid any possible confusion or

21 issues in the future, because seven covers what's in

22 eight.

23 MR. GROSS: You want to stricken

24 eight?

25 MS. SAVITALA: Yes.


73

1 MS. OLSZEWSKI: Let's talk about

2 that. Okay. Thank you. Actually, I had made a

3 note and I forgot to ask the question. I made a

4 note of that. There seems to be a redundant one in

5 there also.

6 MS. SAVITALA: Additionally, with

7 regard to number nine, at the bottom, the last

8 sentence talks about documentation and compliance

9 and a quarterly requirement. And my recollection is

10 that it was a semiannual or six-month requirement.

11 So, that portion of it appears to be new as well.

12 And I'm not sure if there's a reason for a

13 quarterly, but we would, we would request that at a

14 minimum it be made six months.


16 You heard all the discussions about the foundations

17 and I don't want to take a lot of the rest of our

18 time on that, but did you have a comment on that

19 foundational item?

20 MR. BURKLOW: Sure. I will say

21 that we look forward to complying with, you know,

22 conditions. There's no doubt about that. You know,

23 the less conditions we always think is better,

24 obviously, because, you know, it's just, it's easier

25 to, you know, move forward with less conditions.


74

1 But, having said that, we want to work with

2 legislators, no doubt. We're excited that there's

3 obviously a lot of energy, positive energy, and the

4 support from the legislators for Prime to come in

5 and save this hospital. And I think that we've,

6 there has been some dialog with the foundation and

7 we would look forward to working with them and after

8 this hospital is converted nonprofit hopefully there

9 would be positive dialog and we would try to work

10 with them to keep the money obviously for projects

11 for the hospital.

12 MS. OLSZEWSKI: It would seem to me

13 that it would be to your benefit --

14 MR. BURKLOW: Yes.

15 MS. OLSZEWSKI: -- to work with

16 whoever the board of that foundation, basically,

17 because I'm sure that Salem Medical Center needs

18 investment and they've been neglected for a while.

19 So, that would be a good source of revenue.


21 MS. OLSZEWSKI: When I asked about

22 the foundation, I was referring not to any

23 conditions we might talk about, but just basically

24 how you were looking into that.

25 MR. BURKLOW: I misunderstood.


75

1 MS. SAVITALA: Absolutely. We've

2 had conversations and we think we'll continue to

3 have conversations with them.

4 MS. OLSZEWSKI: Okay. I'll start

5 at this end. Mickey?

6 MR. GROSS: Let's go back to number

7 eight here. You look to have that eliminated. I

8 don't know. Maybe I'm missing something. What's

9 the big deal about if you want to eliminate some

10 service that you, am I missing something here, that

11 you just want, you're going to get written approval

12 from the Division. What's the big deal? Am I

13 missing something here? If I am, please tell me.

14 MS. SAVITALA: It's the same as

15 number seven. So, it seems to be duplicative.

16 MR. GROSS: That's your point.

17 Okay.

18 MS. SAVITALA: That's exactly it.

19 MS. OLSZEWSKI: If I could just

20 clarify, when I read it, number seven says, talks

21 about both clinical services and community health

22 programs.

23 MR. GROSS: That's fair.

24 MS. OLSZEWSKI: And eight only

25 talks about clinical services, but because they're


76

1 both, the rest of them, the conditions are worded

2 the same, it sounds duplicative to me also.

3 MR. GROSS: That's fair.

4 MR. HAVENS: Can we just ask staff

5 what they see the difference between seven and

6 eight?

7 MS. OLSZEWSKI: Sure. John, do you

8 think eight is, anything that's not in seven?

9 MR. CALABRIA: I think that our

10 attempt here was, some of the things you just

11 pointed out, Madam Chairperson, in fact, seven is

12 geared more toward services that were by the prior

13 ownership and eight is geared more toward things

14 that will happen once Prime is licensed to provide

15 the services.

16 MR. GROSS: So, one is prior.

17 MR. CALABRIA: You'll see in seven,

18 the second to last line, former partnership.

19 MS. OLSZEWSKI: Okay. I mean,

20 after the first sentence, they're basically the

21 same.

22 MR. CALABRIA: They're similar, but

23 our gearing was for just those people would pay

24 attention to the stuff that was there today and in

25 the past and the next one was for the future.


77

1 MS. OLSZEWSKI: Which is what seven

2 is and eight is going forward.

3 MR. CALABRIA: Eight is Prime Salem

4 shall continue all services or if they make any

5 changes. Seven talks about services by the former

6 ownership and then eight our intent would be geared

7 toward what happens after they take over.

8 MS. OLSZEWSKI: Right.

9 MR. GROSS: Okay.

10 MR. CALABRIA: That's, I mean, we

11 went, in our mind, we wanted to separate a little

12 bit.

13 MS. OLSZEWSKI: It seems to you to

14 add something. Okay. Thank you.

15 MR. HAVENS: Just a question of

16 clarification then. Clinical services, is EKG a

17 clinical service?

18 MR. BURKLOW: I would think so.

19 MR. CALABRIA: It's generally any

20 service that's on the license of the hospital or the

21 hospital advertises that it does.

22 MR. HAVENS: So, licensed clinical

23 services.

24 MR. CALABRIA: Or a service

25 advertised to the community that, hey, we provide


78

1 service X, because they would try to close that

2 service. Obviously if they're advertising it to the

3 community, we would get questioned about, you're

4 closing it. There's probably very little difference

5 between the two, but that's a distinction that we,

6 over the many years, that we've made.

7 MR. HAVENS: I'm just trying to

8 figure out the level of management change that you'd

9 be looking for. If they closed EKG and outsourced

10 it, do they need to get Department approval?

11 MR. CALABRIA: They're not closing

12 it then as long as they can provide it. If they're

13 not providing it themselves, they would tell us

14 that, you know, we're outsourcing to a lab or

15 something. They can outsource labs obviously.

16 MS. OLSZEWSKI: Is your concern

17 with, I mean, the only thing I can see is it says,

18 eight says, continue the ones currently offered.

19 Does that, you feel, tie your hands in some way or,

20 I mean, you're concerned with these two being --

21 MS. SAVITALA: Well, my concern is,

22 and with all due respect, I'm not so sure that I see

23 the distinction necessarily and if I'm confused

24 personally, I'm trying to prevent future confusion

25 from future issues from revising. In reading this,


79

1 the first sentence of number seven says, Prime

2 Salem, so I'm not so sure that it, that is for day

3 one when we take over and ongoing for the clinical

4 services. So, in my mind, it does encompass what's

5 currently there as well as any future changes.

6 MS. OLSZEWSKI: Okay. John,

7 anything more you can add? I'm still, frankly, I'm

8 still confused.

9 DR. ALAIGH: Are they consolidated?

10 MR. CALABRIA: Again, in our mind,

11 we were gearing the one to the current and the past

12 and the other one is in the future, I think. And

13 clearly, I mean, this is not the first time that we

14 have gone through a process that has a lot of

15 conditions on it, not only with Prime, but with

16 other facilities and if there's any confusion, call

17 us. We will unconfuse it, if I can say that.

18 And I just wanted to add one thing

19 to what Mr. Havens said in terms of, it's,

20 basically, life services, services that are being

21 provided. For example, hospitals have to provide

22 clinical services for everything they do on an

23 inpatient basis. They might have a medical clinic,

24 but they may subdivide that it to, say, GI, whatever

25 it might be. So that if they were going to close


80

1 the GI for whatever reason, they'd have to show us

2 why, even though it's not specifically licensed for

3 GI. It's a clinical service.

4 MS. OLSZEWSKI: Okay. Yes?

5 MS. BENTLEY-MCGHEE: Madam Chair,

6 and, John, stay there, I'm clear on what your intent

7 is for seven and eight. I have a question about

8 nine, if we can go to that now.


10 MS. BENTLEY-MCGHEE: Because the

11 applicant questioned why documentation on a

12 quarterly basis. It seems as though they'd prefer

13 it to be semiannual. So, I just wanted to know from

14 you, you know, what your thinking was behind there.

15 MR. CALABRIA: Me?

16 MS. BENTLEY-MCGHEE: Yeah, John.

17 MR. CALABRIA: Our thinking is that

18 this is the providing clinical services for the

19 medically indigent. And in terms of service for

20 indigents in clinics, where we get placed through

21 our survey program, it is on this kind of thing that

22 there's some facilities not serving the medically

23 indigent or somebody with certain insurance. So,

24 our thought here is to keep more indigent, get the

25 data from the facilities themselves four times a


81

1 year, rather than twice a year, and I think that

2 would just help the Department understand if there's

3 any issues that are arising that we should be aware

4 of or if someone calls and complains and says, you

5 know, this happened to me.

6 MS. OLSZEWSKI: Are all medical

7 centers providing this information today?

8 MR. CALABRIA: All the ones under

9 the CNs that's who are providing the service, yes.

10 Not all facilities are reporting directly to us

11 about that kind of stuff, but that's a CN. It's not

12 a licensing issue. It's a licensing condition that

13 you do it, but it's a CN condition that reports

14 back.

15 MS. OLSZEWSKI: And the frequency.

16 MS. BENTLEY-MCGHEE: And just in

17 addition to that, so with the quarterly reporting,

18 how soon after the quarter ends do you get those

19 reports or do you require that they be submitted

20 within a certain time?

21 MR. CALABRIA: We have, we've had

22 discussions with facilities on that, because

23 quarterly information or semiannually or annual

24 information takes a period of time after the end of

25 the time period and so we want to work with each of


82

1 the applicants for any condition that has something

2 like that, when will we have the information. I

3 don't want to say you have to have it in 30 days.

4 We can't even possibly get it within 30 days after

5 the end of the quarter or end of the semiannual

6 period or end of the year, but we can get it in 45

7 or 60. That's fine. That's something we'll work

8 with each applicant for each condition. We've done

9 that in the past.

10 MS. BENTLEY-MCGHEE: What's your

11 experience been how timely this is, is the turnover?

12 MR. CALABRIA: It's usually 60

13 days. That's sort of the bell curve top.

14 MS. BENTLEY-MCGHEE: Okay. Thank

15 you.

16 MS. OLSZEWSKI: And was this

17 condition on the other Prime?

18 MR. CALABRIA: It's our

19 understanding it was, but, I mean, if they have a

20 different understanding, but I think in looking at

21 this and we did have some complaints, I believe,

22 over the, since the last Prime took over about this

23 issue and I think it's better to get the information

24 quarterly just so the Department itself has some

25 information to see whether there's any issues


83

1 arising.

2 MS. SAVITALA: We're not stating

3 that the entire condition is new. We were just, the

4 difference was what we were questioning.

5 DR. BARONE: Radha, are you

6 satisfied with John's reply as to why they would

7 like it more frequently?

8 MS. SAVITALA: I am satisfied with

9 the reason why.

10 MS. BENTLEY-MCGHEE: Thank you.

11 DR. BARONE: And another question.

12 Radha, you also mentioned that you're having

13 conversations with the foundation already. Can you

14 elaborate on how those conversations are going?

15 MS. SAVITALA: They're going well.

16 We've, we don't have an agreement in, as far as a

17 written agreement, that there has been a commitment

18 to help with funds for purchase price as well as

19 operations. So, we think it's positive and we

20 relayed that same message to the Assemblyman, as

21 well as the Senate President as well.

22 DR. BARONE: Thank you.

23 MS. OLSZEWSKI: Okay. Dr. Alaigh?

24 DR. ALAIGH: Anything else?

25 MS. OLSZEWSKI: Wait? Okay.


84

1 MS. DOUGHERTY: I have a question

2 just to follow-up on what you just said, which is

3 that you had discussions with the foundation, not

4 Prime Foundation, but the other foundation

5 concerning funds that can be used for the purchase

6 price. I thought your application made it clear

7 that the purchase price is, I mean, the purchase is

8 being made out of available funds.

9 MS. SAVITALA: It is. It is.

10 MS. DOUGHERTY: So, you're not

11 looking to the foundation, the other foundation, to

12 provide funding that will help you finance the

13 purchase. You've got the monies available for the

14 purchase?

15 MS. SAVITALA: We do. It's not a

16 matter of, you know, cash versus what they would put

17 in, but our discussions were, we want to help you

18 with the transfer of ownership, purchase,

19 operations, everything that goes along with it. So,

20 it's not a condition to the, to us purchasing,

21 because we have the cash to be able to do it.

22 MS. DOUGHERTY: Okay.

23 MS. SAVITALA: But, their position

24 is that they would, they would help us out, because

25 along with the, immediately following the purchase,


85

1 we have ongoing operational obligations, right, so

2 that's what they would be assisting us with.

3 MS. DOUGHERTY: Okay. Not with the

4 purchase price itself.

5 MS. SAVITALA: Not with the

6 purchase price itself.

7 MS. DOUGHERTY: Thank you.

8 MS. OLSZEWSKI: Thank you. Okay.

9 Dr. Alaigh?

10 DR. ALAIGH: So, I have a few

11 questions. And the first question is, what was your

12 rationale behind, you know, the whole for-profit,

13 not-for-profit transaction and what made you

14 determine that this was the way to go?

15 MR. BURKLOW: I'm not privy to the

16 decision, but I will tell you about the company

17 itself.

18 DR. ALAIGH: What's your role in

19 the company? I'm sorry.

20 MR. BURKLOW: I'm the northeast

21 regional CEO.

22 DR. ALAIGH: And you report to?

23 MR. BURKLOW: To Luis Leon, who is

24 the divisional president who then reports to Dr.

25 Prem Reddy. So, that's the work chart. So, I'm a


86

1 couple tiers down. Dr. Reddy created this

2 foundation years ago and over time has donated

3 facilities to the foundation after we've turned them

4 around. And so that's how, that's how the

5 foundation got created and that's how several of the

6 facilities, when you look in the application, are

7 with Prime Healthcare. Most recently, though,

8 because of our desire to grow and grow quicker, we

9 have different, we have funds in both corporations,

10 in the foundation and the for-profit corporation.

11 And so I think, I think, you know, my assessment is,

12 I don't know this for a fact, but my assessment of

13 it is that this is an ability for us to continue to

14 grow more quickly, because we have two corporations

15 that, and both, and the Prime Health Service

16 Corporation, basically, runs both corporations

17 operationally, but it gives us another vehicle to

18 raise money to grow and save hospitals. And so

19 sometimes these decisions are made based on the

20 findings that's available to make these capital

21 contributions and so I think we've been at an

22 incredible pace. I mean, just last year we acquired

23 15 hospitals. So, my assessment would be that we

24 have funds available in that corporation and that

25 was a driver more than anything.


87

1 MS. OLSZEWSKI: And currently Prime

2 owns how many hospitals for-profit and how many

3 not-for-profit? I thought I saw 50?

4 MS. SAVITALA: For a total of 44

5 hospitals, 14 of which, with the latest addition,

6 are part of the nonprofit.

7 MR. ORTEGA: I'm sorry, Fred

8 Ortega, F-R-E-D, O-R-T-E-G-A, director of government

9 relations for Prime Healthcare. We currently have

10 12 nonprofit hospitals in five states and last

11 year's -- so, 14, pardon me, it's 14 in five states

12 and last year we added four hospitals to the

13 foundation, acquired them directly in the

14 foundation. So, as Bryan said, it's kind of part of

15 our growth strategy. That was the first year when

16 we actually we acquired that many hospitals directly

17 in the foundation.

18 DR. ALAIGH: And, Radha, from your

19 perspective, a legal perspective, do you see any

20 distinction as to why it's one opposed to the other?

21 MS. SAVITALA: Well, the decision

22 to have Prime Healthcare Foundation do the

23 acquisition is part due to what Bryan spoke about in

24 terms of funds being available, but it's a decision

25 that was made with the seller as well. So,


88

1 Community Health Systems, as well as Prime, had

2 discussions about whether it be for-profit versus

3 not-for-profit and, you know, one of the

4 acquisitions last year was supposed to be for-profit

5 in Pennsylvania and in having discussions with the

6 Attorney General we made it a nonprofit. So, there

7 are various factors that go into which entity

8 acquires it and here it was, it was many

9 discussions, including discussions with the seller.

10 DR. ALAIGH: And the Board as well?

11 MS. SAVITALA: Absolutely.

12 MS. OLSZEWSKI: Susan, you had --

13 MS. DOUGHERTY: Yes. You said

14 something a few minutes ago about Prime Healthcare

15 Services runs both companies, meaning?

16 MR. BURKLOW: Operationally. In

17 other words, we don't have separate management when

18 we look at our --

19 MS. SAVITALA: It's Prime

20 Healthcare Management, that provides the management

21 services.

22 MS. DOUGHERTY: That's what I was

23 trying to clarify. My understanding is the services

24 owns and operates the for profits. The foundation,

25 the Prime Foundation, owns and operates the


89

1 nonprofits. Prime Healthcare Management manages

2 both sets of hospitals.

3 MS. SAVITALA: And by management we

4 really mean management services and administrative

5 services, so --

6 MS. DOUGHERTY: Understood.

7 MS. SAVITALA: -- they're all

8 locally run by the LLCs by themselves. They're the

9 owners and the operators of the hospitals. So,

10 Prime Healthcare Foundation Salem will be the

11 operator of the hospital. Just the parent is the

12 foundation and the management entity, Prime

13 Healthcare Management, will provide management

14 services.

15 MS. DOUGHERTY: I just wanted to

16 clarify that. It wasn't clear in the application

17 and the application kept talking about Prime

18 Healthcare, which was defined as services, I think,

19 Prime Healthcare Services, and my understanding is

20 Prime Healthcare Services, that entity, that legal

21 entity, does not have any involvement in what Prime

22 Salem is going to do.

23 MS. SAVITALA: That is correct.

24 MS. DOUGHERTY: Okay. Thank you.

25 DR. ALAIGH: But, the management


90

1 services organization will and they do it for both,

2 the not-for-profit as well as the for-profit?

3 MS. DOUGHERTY: Yes.

4 DR. ALAIGH: So, one of the things

5 that, you know, the staff recommends is increasing

6 sort of the personnel, the staff, to provide

7 services. Is that something you identified as a gap

8 in terms of having the appropriate, you know,

9 manpower to service the community?

10 MS. SAVITALA: I don't know that

11 there was a recommendation to.

12 DR. ALAIGH: I think it reads,

13 right, to hire substantially all individuals

14 employed and also I thought there was something

15 about, you know, hiring more people as needed.

16 MS. SAVITALA: As needed.

17 Absolutely.

18 DR. ALAIGH: Is there a need is my

19 question?

20 MR. BURKLOW: You know, this is how

21 we typically transition a hospital into Prime. We

22 send our team out of the corporate clinical managers

23 to assess the departments and then we make those

24 decisions onsite. That hasn't been done yet. We

25 don't do it kind of on a bench basis. We go onsite


91

1 to really look at it. And so in some areas we add

2 and some we might subtract if we think an area is

3 really overstaffed and a lot of it is just our

4 experience as leaders and looking at our Prime

5 model. So, I would say that we will do that and we

6 haven't done that yet.

7 DR. ALAIGH: And are there any

8 concerns about the unions or what's the status of

9 the unions there at the hospital?

10 MR. BURKLOW: Well, we, I think

11 you've heard some of the history of this and that,

12 and so we would, we've successfully negotiated with

13 unions. We tried to meet with them, frankly, before

14 the public hearing that the union, I guess it was

15 HPAE. We haven't had that meeting yet. We intend

16 to sit down with them and begin the dialog and, of

17 course, we want to get a contract resolved. Will it

18 happen before ownership? Probably not. At this

19 point CHS doesn't really have a big incentive to get

20 it done. So, I think it will happen after the

21 acquisition, frankly.

22 DR. ALAIGH: And are there other

23 unions that are going to be forming or is this the

24 only one?

25 MR. BURKLOW: The only one that we


92

1 have knowledge of that was, that it was formed.

2 DR. ALAIGH: So, you haven't had a

3 meeting where you don't know what their concerns are

4 or what you're going to be dealing with?

5 MR. BURKLOW: Not at this time, no.

6 DR. ALAIGH: What about the

7 physician recruitment? What's the average age of

8 physicians on staff? What's your recruitment

9 strategy?

10 MR. BURKLOW: Like many community

11 hospitals, the medical staffs are getting older. I

12 believe that the average age in this hospital is

13 over 50 years old. And so, typically, we do try to,

14 you know, recruit specialists in those areas.

15 MR. GROSS: 50 is not old. Let's

16 make that very clear, sir.

17 MR. BURKLOW: I'm north of that,

18 too, so I can relate, but I will tell you that when

19 you look at, you know, like I say, the average age

20 was 55 or something, unfortunately that means that

21 there's a lot of 75 year olds still practicing, you

22 know, when 35 year olds are coming out to get a 50

23 plus average.

24 DR. ALAIGH: For a hospital that's

25 an old medical staff.


93

1 MR. BURKLOW: While I agree with

2 you, 50 is not old at all, believe me, but our plan

3 would be to recruit those specialties that are

4 needed and we'll also try to, we have, obviously,

5 five other facilities in mainly northern New Jersey.

6 We have three in Pennsylvania. So, it gives us a

7 unique opportunity to kind of for a regional

8 recruitment effort and many of our hospitals we

9 share doctors after acquisition. And so I think

10 those opportunities will come to fruition after

11 given the opportunity to move forward.

12 MS. SAVITALA: Additionally, we

13 have residency programs in a number of our New

14 Jersey hospitals, as well as Pennsylvania. That

15 gives us the opportunity to work with those that are

16 south of 50 in terms of physicians and possibly give

17 synergies to Salem as well.

18 DR. ALAIGH: So, you're thinking of

19 having that as a rotation site for the other

20 residents?

21 MS. SAVITALA: We haven't explored

22 it necessarily, but because it's at the other

23 hospitals, I wouldn't rule it out. But, again, the

24 assessments for Salem specific still need to be

25 done.


94

1 DR. ALAIGH: Now, again, this is

2 something that the State has a concern in the

3 reduction in charity care funding and then you have

4 an occupancy rate of about 30 percent. You've got

5 an aging, you know, physician, medical staff.

6 You're going to need some time to be able to

7 function to the occupancy level. So, what are your,

8 in some of your, sort of, quick tactics that you're

9 going to be using around sustainability and

10 stabilization at this point?

11 MR. BURKLOW: I think we

12 mentioned --

13 DR. ALAIGH: Also, the second part

14 of the question is the charity care funding, what

15 are you going to be doing for raising revenue?

16 Because, you do rely on that.

17 MR. BURKLOW: I think I said

18 earlier in kind of my presentation that one, one of

19 our initial strategies is to really, basically, fine

20 tune the emergency room services. We find that

21 that's such a gateway to the facility. I would say

22 at least half the residents in Salem aren't using

23 that and going across the river and going to other

24 facilities. So, the quicker we can come in there

25 and put in our Prime model emergency room I think


95

1 the better. That will drive some more business.

2 We've seen, just to give you an

3 example, we've just purchased St. Michael's in May,

4 right. They were used to having about 110 or

5 fifteen ER visits a day. This last month we

6 averaged 160. So, we've already grown our emergency

7 room business quite a bit there. So, which does

8 bring revenue to the facility. That makes some

9 initial stabilization.

10 And with regards to, so that's

11 going to be our main focus, to be honest and candid,

12 and initially as we started looking at service lines

13 and how we can grow them and get our hands into the

14 operation and meet the people and the doctors and

15 work with the community and the boards that will be

16 created as part of the condition.

17 And so with regards to charity

18 care, we are very cognizant of our role, you know,

19 in healthcare. We don't turn people away. We, you

20 know, obviously we follow the EMTALA guidelines and

21 we honor charity care policies. We have our own.

22 So, that won't, that won't change after the

23 acquisition of Memorial Salem. We will continue to

24 give charity care, no doubt.

25 DR. ALAIGH: Are you looking at


96

1 ways of diversifying your revenue source in order to

2 help stabilization?

3 MR. BURKLOW: Absolutely. One I

4 just mentioned would be and we were very encouraged,

5 in fact, to read Governor Christie's cry for more

6 psych beds, because we believe that is a service we

7 could immediately implement if given the opportunity

8 with the CN application to expand services there.

9 We, many of our hospitals have primarily geropsych

10 programs. There's a big need in the community and

11 that would be something that could enhance revenues

12 as well.

13 MS. OLSZEWSKI: I thought I

14 remembered in Prime, one of the other applications,

15 Prime has a number of psych hospitals or psych --

16 MR. BURKLOW: In northern New

17 Jersey we are the dominant provider. We have, I

18 think, about 25 outpatient programs between two

19 hospitals and we have a 60 bed facility in Boonton.

20 So, we are a huge provider of psych, psychiatric

21 services in the State of New Jersey.

22 DR. ALAIGH: So, what about your

23 initial assessment on technology, EMRs, capital

24 investments, are those things that you think are

25 going to be a priority?


97

1 MR. BURKLOW: Absolutely. We know

2 that there's been only maintenance capital earmarked

3 for this facility as the equipment's broken down by

4 CHS for many years and, like I said earlier, we'll

5 have our clinical vice presidents come in, hopefully

6 prior to the sale, if not right after the sale, to

7 make that assessment. And it's not atypical that we

8 come right in with, you know, new equipment such as

9 monitoring or MRIs, if they're desperately needed.

10 So, we'll rely on our clinical experts to make that

11 judgment and assess that after acquisition.

12 DR. ALAIGH: Now, what about the

13 morale in the employees?

14 MR. BURKLOW: I think the morale's

15 not very good right now. My observation of being

16 there a couple of times and a lot of it is because

17 of the uncertainty of these kinds of transactions.

18 Obviously, if you're working at Memorial Salem now,

19 you've known for some time that your parent company

20 really didn't want you and is trying to divest of

21 you. That's never very good for morale and the

22 length of time to get these approvals kind of adds

23 to that. So, right now we will have a job to try to

24 pick them up, but I can assure you that our

25 experience, specifically in New Jersey, is good and


98

1 that, and I think that with the capital and the

2 systems and the, that we're going to implement, that

3 we will work on morale quickly and we've seen good

4 turnaround in that just because people feel the

5 sense of energy and commitment, recommitment to

6 their facility and so we're excited about that.

7 DR. ALAIGH: Now, what's the status

8 of your managed care contracts in the other

9 facilities and what's the time for this facility?

10 MR. BURKLOW: If you just look at

11 New Jersey in specific --

12 DR. ALAIGH: Just looking at New

13 Jersey.

14 MR. BURKLOW: So, when we acquired

15 St. Mary's in Passaic, we had contracts and we

16 renegotiated quite a few of those over the first

17 year that we were, you know, owning the facility.

18 The St. Clare's system pretty much had contracts in

19 place and we're in the process of renegotiating a

20 few of them, but we haven't, we have all the main

21 HMOs in those facilities. When we acquired St.

22 Michael's --

23 DR. ALAIGH: Are there any managed

24 care contracts that you're not in in the other

25 facilities and what about the status here? Just


99

1 tell me that.

2 MR. BURKLOW: Here, the status

3 here, well, in St. Michael's there's still some that

4 we are not in. That facility was in bankruptcy and,

5 frankly, was underpaid by many payers. They were

6 taken advantage of. That's one of the reasons we

7 felt it was in bankruptcy, frankly, and so we've

8 just recently negotiated with United and we're about

9 to get Aetna done. So, at that point --

10 DR. ALAIGH: Horizon?

11 MR. BURKLOW: In St. Michael's.

12 DR. ALAIGH: Are you in Horizon?

13 MR. BURKLOW: Yes, we're in

14 Horizon. We were able to negotiate that one at the

15 time of the sale and were never out of network with

16 Horizon Blue Cross. And this facility we, while we

17 reviewed the contracts and they're in most of them,

18 they've just gave notice, I think CHS did, to one

19 Medicaid managed care contract that pays very poorly

20 and slowly. And so we would, that's part of our

21 process in acquisition. We'll go through that. And

22 I think that we will assess, you know, where we are

23 and part of the strength in terms of getting

24 multiple facilities is having a little bit more

25 power in negotiating fair rates. So, we intend to,


100

1 you know, go through that process after acquisition.

2 DR. ALAIGH: So, you would

3 negotiate based on a system of hospitals, not with

4 one.

5 MR. BURKLOW: That's what we would

6 like to do when possible. Many of the payers don't

7 like us to do that as you can imagine.

8 DR. ALAIGH: So, at Salem right

9 now, what contracts do you have?

10 MS. SAVITALA: So, the difficulty

11 with Salem is that it's part of a larger system,

12 right. So, we can't necessarily assume contracts

13 that our system, like, CHS contracts. We would have

14 to look into those and determine payer by payer and

15 our role is always is to remain in-network and not

16 have patients be affected and have to go

17 out-of-network. So, our goal is to always do that.

18 So, it would depend payer by payer, either we'd have

19 to do a hospital specific contract versus a network

20 contract. So, that still needs to be conducted.

21 DR. ALAIGH: And you have

22 for-profits and not-for-profits, so that's the other

23 piece.

24 MS. SAVITALA: Correct.

25 DR. ALAIGH: Now, you know, in the


101

1 conditions, there are a number of different forms

2 that have to be established, whether it's a CAG,

3 whether it's an advisory board on your reporting of

4 your performance clinically, financially, annual

5 meetings that are open to the public. You know, so

6 there are lots of elements that you're going to have

7 to obviously comply by. But, what is your governing

8 structure and how does all this come into play as

9 you're coming up with one master, you know,

10 accountability organization?

11 MS. SAVITALA: Well, I mean, the

12 good news is that Bryan is involved in the northeast

13 region, right. So, he understands what's already

14 taken place transitionally with the other hospitals

15 as well as what needs to happen here. And when we

16 say they're locally run, we really do mean that. We

17 expect that the local administration will work with

18 the current board to identify the individuals that

19 would be best in those various roles. So, we'll

20 have to work much with the local community members

21 as well as the administration to identify those.

22 But, the good news is we've done it before for the

23 New Jersey hospitals and --

24 DR. ALAIGH: So, it's, let's not

25 complicate it. So, in the hospital, there's a


102

1 hospital board; right?

2 MR. BURKLOW: Yes.

3 DR. ALAIGH: How does that connect

4 to the oversight board and the governance board and

5 to the rest of the organization, the rest of the

6 client organization, the foundation, I guess, in

7 this case?

8 MR. BURKLOW: I think like many

9 systems, the parent corporation, those boards report

10 up to the parent corporation. So, I think that's

11 how it reports up. And they're having defined

12 responsibilities and specifically for clinical

13 decision making, especially physician credentialing,

14 is all done on a local board level. But, of course,

15 the parent board is accountable for this oversight

16 to make sure that those duties are being performed

17 by the local boards.

18 DR. ALAIGH: The CAG and the

19 regional advisory board, is that going to be part of

20 what, at what level will that interact with the --

21 MR. BURKLOW: The CAG board is

22 really for the State's protection, you know, and so

23 it will, I mean, we'll obviously, you know, have to

24 comply with that, but it's really to check us out.

25 So, it's not going to roll up to Prime. The


103

1 community board doesn't do that, but the local

2 advisory board would.

3 DR. ALAIGH: The input from the CAG

4 or the local advisory board has to somehow come into

5 the hospital board.

6 MR. BURKLOW: I'm sure the CEO

7 working with the advisory board would bring that

8 information there.

9 DR. ALAIGH: The CEO would sit on

10 CAG?

11 MR. BOCCANFUSO: Yes.

12 DR. ALAIGH: And would be the

13 liaison between the hospital board and the CAG?


15 DR. ALAIGH: And similarly the

16 advisory board?


18 DR. ALAIGH: Okay.

19 MS. OLSZEWSKI: Okay. Thank you so

20 much. Finally, Board, Board discussion and vote.

21 And before we get into that, we, there was a public

22 meeting that was held. I think, Connie, you were

23 the member that was there. Thank you for that. We

24 all received copies of the transcript and I just

25 want to just check and make sure that all the


104

1 members received and had a chance to review those

2 copies. So, I'm seeing nods all around.

3 MR. GROSS: That is correct.


5 Because in many cases, they do affect conditions and

6 certainly our discussion, those public quorums.

7 Okay. Discussion, anyone want to

8 start off? I would say, for one, that this, again,

9 the staff did an excellent job in pulling everything

10 together for us with that. Prime does, has to me,

11 shown that they are taking, willing to take a

12 troubled hospital in our area, in an area where it

13 hasn't been functioning well, it's been neglected

14 for a number of years and work in turning it around.

15 And, so, this is a community that's going to get

16 attention and actually some investment to help them

17 succeed. So, I feel that it's a strong application

18 and that we should approve it.

19 Any other comments made? Anyone

20 want to put forward a motion?

21 MS. BENTLEY-MCGHEE: I just have a

22 comment.

23 MS. OLSZEWSKI: Okay. Sure.

24 Connie?

25 MS. BENTLEY-MCGHEE: I just


105

1 appreciate how the staff is always on it when the

2 questions come up and you're able to provide a

3 rationale that I can live with and, you know, it

4 just makes it easier to align myself with your

5 recommendations. So, thank you. And thank you to

6 the applicant for your willingness to be flexible.

7 MS. OLSZEWSKI: And I'm not hearing

8 anyone question any of the conditions.

9 MR. KANE: I would just like to

10 echo. I appreciate Prime coming in and taking over

11 this important hospital, it's an important part of

12 the State and also their continued support and work

13 with the Department. I don't think I've heard

14 anything but positive coming from the Department and

15 any time you've got a for-profit hospital coming

16 into the State it's very nice to hear. I really

17 think it's a nonprofit, but coming in as for-profit,

18 so I appreciate that.

19 MS. OLSZEWSKI: Thank you. Mickey?

20 MR. GROSS: You're usually keeping

21 an eye on me over there, Assistant Commissioner, but

22 my question is, actually, are you, I know you had

23 some serious questions here, are you satisfied with

24 what you're hearing here today?

25 MS. DOUGHERTY: Yes. Thank you.


106

1 MR. GROSS: You are. Okay.

2 MS. OLSZEWSKI: Okay. Do I hear a

3 motion?

4 MR. GROSS: I'll make a motion that

5 this be approved contingent on all the

6 recommendations that were submitted to the Board for

7 our consideration.

8 MS. BENTLEY-MCGHEE: I second.

9 MS. OLSZEWSKI: Thank you. And my,

10 if I can just amend and say that they have satisfied

11 all regulatory and licensing requirements in this

12 application. Okay.

13 MS. HERNANDEZ: Mr. Kane?

14 MR. KANE: Yes.




18 MS. BENTLEY-MCGHEE: Yes.


20 DR. BARONE: Yes.

21 MS. HERNANDEZ: Mr. Havens?

22 MR. HAVENS: Yes.

23 MS. HERNANDEZ: Dr. Alaigh?

24 DR. ALAIGH: Yes.

25 MS. HERNANDEZ: We have six yeses,


107

1 motion carries.


3 MR. GROSS: You didn't ask me.

4 MS. HERNANDEZ: Sorry. Sorry.

5 MR. GROSS: Yes.

6 MS. HERNANDEZ: Mr. Gross?

7 MR. GROSS: Yes.

8 MS. HERNANDEZ: We have seven

9 yeses, motion carries.

10 MS. OLSZEWSKI: Thank you. Before,

11 just some final business before we adjourn, we

12 probably will be having a March meeting. We'll be

13 having a March meeting.

14 DR. BARONE: What is the date of

15 the March meeting?

16 MS. HERNANDEZ: Thursday the

17 second.

18 MS. DOUGHERTY: There is a slim

19 possibility that the Board may be asked to meet

20 sooner than that, the end of February. If we can't

21 get a quorum, we won't meet then obviously. And I

22 will work with Jamie to let you all know.

23 MS. OLSZEWSKI: Okay. There are

24 two public meetings, Monday and Tuesday.

25 MR. GROSS: Where?


108

1 MS. OLSZEWSKI: Up in Glen Ridge

2 and --

3 MS. DOUGHERTY: Montclair.

4 MS. BENTLEY-MCGHEE: Is it

5 Montclair or Burlington County?

6 MS. DOUGHERTY: I thought the other

7 side was Montclair.

8 DR. ALAIGH: When is it, Monday?

9 MS. OLSZEWSKI: Monday and Tuesday.

10 It's next week.

11 MS. DOUGHERTY: There's two

12 hearings. One on Monday and one on Tuesday.

13 MS. OLSZEWSKI: They are from six

14 to seven?

15 MS. DOUGHERTY: Yes, or until

16 people finish speaking and they can go longer than

17 that.

18 MS. OLSZEWSKI: So, Tuesday you

19 have nobody. You have Connie.

20 MS. BENTLEY-MCGHEE: I'm on for

21 Monday, the public hearing on Monday.

22 MS. OLSZEWSKI: I said I could do

23 one day. Anybody else?

24 MR. GROSS: Monday I can do.

25 Tuesday I can't.


109

1 MS. OLSZEWSKI: You can go Monday.

2 MS. BREWEN-ALVINO: This is

3 Suzanne. I'm scheduled for the sixth.

4 MS. DOUGHERTY: So, we have three

5 for Monday and nobody for Tuesday.

6 MS. OLSZEWSKI: I'll go Tuesday

7 then. Anybody else can make it on Tuesday? Okay.

8 Okay.

9 (Discussion amongst Board.)

10 MS. DOUGHERTY: Ardent Hackensack

11 is purchasing, Ardent is purchasing at the

12 grandfather or great grandfather level. You got the

13 paperwork for it.

14 MS. HERNANDEZ: Mike received it.

15 He's representing Mike.

16 MR. HAVENS: So, I'll confer with

17 Mike.


19 Okay. Any other business before we adjourn? Okay.

20 Meeting is adjourned.

21 (Meeting adjourned at 11:50 a.m.)

22

23

24

25


110

1 C E R T I F I C A T E

2 I, DENISE L. SWEET, a Certified

3 Court Reporter and Registered Professional Reporter,

4 do hereby certify that the foregoing is a true and

5 accurate transcript of the testimony as taken by and

6 before me at the time, place and on the date

7 hereinbefore set forth.

8 I DO FURTHER CERTIFY that I am neither a

9 relative nor employee nor attorney or counsel of any

10 of the parties to this action, and that I am neither

11 a relative nor employee of such attorney or counsel,

12 and that I am not financially interested in the

13 action.

14

15

16

17

18

19 C:\TINYTRAN\Denise Sweet.bmp

20

21

22

23 DENISE L. SWEET, CCR, RPR

24

25 DATED: February 17, 2017


MINUTES OF THE STATE HEALTH PLANNING BOARD … SHPB Meeting... · Susan Olszewski, Chairperson...

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Transcript of MINUTES OF THE STATE HEALTH PLANNING BOARD … SHPB Meeting... · Susan Olszewski, Chairperson...