CarePoint Health beginning process of becoming a nonprofit (here’s why — and what happens next)

Dr. Achintya Moulick. (File photo)

CarePoint Health, a for-profit health care system made up of three hospitals in Hudson County, announced this week that it will enter a new chapter of stewardship following the formation of a community-based, nonprofit organization.

In other words, CarePoint is taking the first steps toward becoming a nonprofit health system.

CarePoint CEO Dr. Achintya Moulick, in collaboration with local community leaders, will lead the new nonprofit organization, which will oversee Bayonne Medical Center, Hoboken University Medical Center and Christ Hospital in Jersey City — all of which are considered safety-net hospitals.

Moulick will oversee the formation of the new nonprofit, which was conceived in collaboration with CarePoint’s founders, Vivek Garipalli and James Lawler.

Garipalli and Lawler, along with their affiliates, will pledge their majority interest in CarePoint Health hospitals and Christ Hospital land. They also will step down from their roles of oversight following the formation of the new nonprofit board.

Garipalli, in a release, said the system is ready for the next stage.

“Dr. Moulick and CarePoint’s leadership team have demonstrated an unwavering commitment to preserving community health care in Hudson County, especially in the wake of the COVID-19 pandemic,” he said. “After working closely with Dr. Moulick, we decided together that CarePoint is ready to begin its next chapter under the guidance of a new nonprofit board.

“Following 13 years of hard work transforming the hospitals, our biggest priority is preserving CarePoint’s future so that the hospitals remain a vital resource for families in Hudson County for many years to come.”

CarePoint Health employs over 3,000 people in Hudson County and provides acute care to a majority of the county’s population, including treatment of more than 22,000 COVID-19 patients to date over the course of the pandemic.

The announcement was praised by Kimberly Wallace-Scalcione, a spokesperson for Jersey City Mayor Steve Fulop.

“Christ Hospital and CarePoint have been critical partners with the city and the community before and during the pandemic, ensuring residents throughout the area have access to the top-quality health care they deserve, and, so, if transitioning to a nonprofit organization is the best way to further the life-saving services they offer, then we will, of course, support that,” she said. “This only strengthens the importance of Christ Hospital for the entire community.”

Bayonne Mayor Jimmy Davis agreed.

“From day one, I have remained steadfast in my belief that the city of Bayonne must always have a hospital that is responsive to the needs of our residents,” he said. “CarePoint’s conversion into a nonprofit will allow the residents of Bayonne to continue having the broadest range of quality health care services made available to them. I look forward to working with CarePoint to ensure that the needs of our community continue to be met.”

The announcement was not supported by all. Hudson Regional Hospital, which owns the Bayonne Medical Center property and has been in a long-running dispute with CarePoint, slammed the news through spokesperson Ron Simoncini.

“We are relieved that CarePoint has acknowledged that there is no longer any point to continuing the charade that eminent domain can be used to condemn our property at Bayonne Medical Center l so it can be turned over to an inexperienced operator and CarePoint can walk out with tens of millions,” he said. “However, we are appalled that it has drawn up a new chapter in which it poses as rescuing its acute care facilities by converting to not-for-profit status. If they need rescuing, it is from CarePoint, not by CarePoint.” (See full story here.)

CarePoint officials said Moulick is presently engaging in discussions with key Hudson County community members. CarePoint officials said an official announcement of the new board formation and nonprofit mission statement will follow shortly.

Moulick provided more details regarding the transition to ROI-NJ. Here is a look at the conversation.

ROI-NJ: This is the first step of CarePoint transitioning from a for-profit to a nonprofit hospital system. Explain the next steps.

Achintya Moulick: CarePoint Health’s three hospitals will continue to operate in their current form and will be controlled by a new nonprofit organization. The nonprofit’s top priority is to work collaboratively with the Hudson County community to maintain critical health care for those who need it most. Any decision made by the nonprofit board will be to sustain these three hospitals moving forward.

I will be overseeing the formation of the new nonprofit, and an official announcement of the new board formation will follow. Mr. Garipalli and Mr. Lawler will step down from their roles of oversight following the formation of the new nonprofit board.

ROI: What are the benefits of making this move? And why transition away from being for-profit? Your group previously has praised the benefits.

AM: There are many benefits to being a nonprofit, controlled community health system, including the ability to obtain some government and philanthropic support. CarePoint continues to care for a high percentage of uninsured and Medicaid patients, especially at Christ Hospital and Hoboken University Medical Center, where they make up approximately 60% of the current patient mix. Nonprofit controlled hospitals are exempt from certain taxes and receive certain regulatory benefits. Additionally, not-for-profits can receive tax-deductible contributions from the community and other benefactors.

Regardless of the circumstances and benefits of a for-profit in the past, we believe that the health system will be much better positioned for the future as a nonprofit moving forward.

ROI: So, what needs to happen moving forward — both by CarePoint and health care and government officials to complete this transition?

AM: Mr. Garipalli, Mr. Lawler and their affiliates have pledged their majority interest in CarePoint Health hospitals and Christ Hospital land, and we are now in the process of securing structural and regulatory approvals. It is a complicated legal undertaking and requires a number of approvals of third parties, such as lenders, payers and regulators.

ROI: We know this is a complicated process, but can you give an estimate of a timeline on the move: By the end of 2021, during the first or second half of 2022, in 2023 or beyond?

AM: We have asked our lawyers to work as fast as possible to complete everything that has to happen. But the timing, particularly of regulatory and other third-party approvals, is beyond our control and sometimes hard to predict. We hope the stewardship and change of control can happen as soon as possible.