CarePoint Health Systems, a New Jersey-based health care system consisting of three hospitals, has filed for bankruptcy and financial restructuring because of ongoing cost challenges.
In order to facilitate the restructuring process, the nonprofit filed for Chapter 11 relief in the U.S. Bankruptcy Court in Delaware.
“CarePoint Health Systems oversees the operations of three hospitals in Hudson County, New Jersey: Bayonne Medical Center, Christ Hospital in Jersey City, and Hoboken University Medical Center. Collectively, they provide services to over 60 percent of the population of the county and 65 percent of their patients are uninsured or underinsured.”
The Bayonne Medical Center is an acute-care facility with 261 beds, serving close to 100,000 patients annually. Christ Hospital is a general acute-care center with 349 beds, and Hoboken University Medical Center is a 348-bed acute-care hospital with a 34-bay emergency room.
In a voluntary bankruptcy petition filed on Nov. 3, CarePoint estimated it has as many as 49 creditors. The nonprofit owes more than $109 million to 30 of its largest unsecured creditors, according to the petition.
In addition to CarePoint, multiple entities affiliated with the health care system have also filed for bankruptcy.
“The decision to initiate this strategic reorganization has been driven by several factors, including the dramatic increase in direct costs of operating the hospitals after COVID, insufficient state funding, and persistent reimbursement challenges that hospitals across the country have been facing,” the nonprofit stated.
Between 2021 and 2023, overall inflation grew by 12.4 percent, which was more than two times faster than the rise in Medicare reimbursement for hospital inpatient care, according to the AHA.
Dr. Achintya Moulick, who transitioned the CarePoint system to a nonprofit and helped keep the facilities open following the COVID-19 pandemic, will lead the organization in its current transition.
Moulick said the restructuring bankruptcy was chosen after thoroughly evaluating all options.
“Safety net hospitals like Christ Hospital and Hoboken University Medical Center are vital lifelines for the uninsured, underinsured, and most vulnerable populations,” he said.
Facilities May Close
There have been indications that CarePoint was facing financial difficulties and that some of its hospitals could close.To ensure continued operations at Bayonne, the department asked CarePoint to submit a disaster plan to deal with such situations.
The entity faced “hurdles resulting from industry and regulatory headwinds,” which, combined with highly leveraged balance sheets, “significantly challenged” operations, and depleted liquidity. The “most significant headwind” was a decline in revenues from Medicare reimbursements, according to its filing.
The decision was taken after Steward faced rising material and operational costs because of inflation, elevated costs of labor, and “insufficient reimbursements” from the Medicaid and Medicare programs, according to the filing.
“We are seeing a lot of distress in health care as the market remains very challenging for providers, so we expect to see continued levels of health care bankruptcies in 2024 that we saw last year,” Tyler Brasher, director at Gibbins Advisors, said at the time.