Dive Brief:
- CarePoint Health exited Chapter 11 bankruptcy on Friday after a U.S. Bankruptcy Court approved a deal to transfer operational control of the system’s three hospitals to Hudson Regional Hospital.
- The New Jersey-based nonprofit health system filed for bankruptcy protections in November, citing a “dramatic” increase in operating costs following the COVID-19 pandemic, insufficient state funds and reimbursement challenges.
- The deal is a step toward creating Hudson Health System, which the systems first envisioned in January 2024, prior to CarePoint’s restructuring. In a statement, Hudson Regional said it planned to rebrand CarePoint’s hospitals and would have more details to share in the coming weeks.
Dive Insight:
Hudson Regional and CarePoint have a tumultuous history.
Hudson Regional has been gunning to purchase CarePoint’s hospital operations — which include 278-bed Bayonne Medical Center, 348-bed Hoboken University Medical Center and 349-bed Christ Hospital in Jersey City — since 2020, according to a report from the Hudson County View.
CarePoint has struggled financially for years due to rising operating costs. Last year, the health system threatened to lay off 2,600 workers, citing operational difficulties, and received notices from New Jersey regulators warning that continued poor financial performance could lead to facility closures.
Hudson Regional has repeatedly said it can help right CarePoint’s struggling ship, including in January of last year when the systems signed a letter of intent to merge.
However, within months of that announcement, CarePoint entered talks to combine with another health system — Michigan-based Insight Management and Consulting Services, which also bills itself as a hospital turnaround company. The deal with Hudson Regional subsequently fell apart, with Hudson Regional suing for breach of contract and Insight CEO Jawad Shah taking the reins as CEO of CarePoint for less than a month in October.
When CarePoint ultimately filed for bankruptcy — holding approximately $165 million in debt and named as a defendant in 53 pending lawsuits — both Insight and Hudson Regional began vying for influence in the proceedings, court documents show.
Hudson Regional emerged almost immediately as the likely front runner for taking over operations at CarePoint.
The hospital provided at least $25 million in debtor-in-posession financing to keep operations afloat during the restructuring process, and later took over operations of Bayonne Medical Center on an interim basis and agreed to provide oversight services to the remaining facilities.
In total, the hospital injected “tens of millions” into CarePoint during its bankruptcy to support payroll, equipment and supplies, a Hudson Regional spokesperson said in a statement to Healthcare Dive.
Insight criticized this close financial connection in legal filings, according to a report from the Wall Street Journal. The system said Hudson Regional’s financial entanglements with CarePoint made it nearly impossible for other would-be buyers to bid on the hospitals. Insight appeared to be a credible buyer. The system had just purchased Steward Health Care’s Ohio hospital portfolio from another high-profile healthcare bankruptcy in October.
Ultimately, the court approved Hudson Regional’s bid to permanently assume operations of CarePoint, completing the hospital’s multi-year effort to expand. The deal immediately grants Hudson Regional Chairman Yan Moshe ownership of Bayonne’s operations and real estate, and operational control of the remaining hospitals and healthcare practices.
In time, Moshe plans to purchase the real estate of Christ Hospital and Hoboken University Medical Center from hospital landlord Eisenreich Avery, according to a company spokesperson.
“At the end of this process, it’s critical that the property and operations be of common ownership,” the spokesperson said.
Meanwhile, Hudson Regional says it plans to invest further in developing CarePoint facilities.
Upgrades at Bayonne are already underway, including a remodeled emergency department, new radiology department and a restored graduate medical education program, so the medical center can begin operating again as a teaching hospital.
The restructuring plan was approved in the District of Delaware by U.S. Bankruptcy Judge Kate Stickles. Previously, the New Jersey Department of Health signed off on Hudson Regional assuming ownership of Bayonne Medical Center for $13 million. Hudson Regional declined to disclose the full purchase price of CarePoint’s operations, and as of press time the court had not filed the final sale order.
