South Jersey hospital is on life support, lawmakers say, seeing rescue in disputed trust fund

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New Jersey State Senate President Steve Sweeney, backed by fellow South Jersey lawmakers and other supporters, speaks at a news conference outside Memorial Hospital of Salem County on Tuesday, Oct. 3, 2017. He called for the return to the county of a $51 million trust fund that is now held by a Morris County foundation. The money, the lawmakers say, would help facilitate the sale of Memorial to a new buyer.

The Memorial Hospital of Salem County, which has been struggling for years, remains on life support and desperately needs an infusion of cash from a trust fund to keep its doors open, state lawmakers said Tuesday.

A trio of lawmakers led by State Senate President Steve Sweeney (D., Gloucester) called for the return of the $51 million trust fund to Salem County to help facilitate the sale of the hospital. The money was set aside for the Salem Health and Wellness Foundation when the hospital was sold earlier, in 2002.

Camera icon Avi Steinhardt / For the Inquirer
Memorial Hospital of Salem County, N.J., needs a financial rescue, South Jersey lawmakers said Tuesday, Oct. 3, 2017.

“This is not their money, it belongs to the people of Salem County and is supposed to be used to support medical care in the area,” Sweeney said in a statement. “The funds are a key ingredient to facilitate the sale to a non-profit that will keep the hospital open and provide medical care for the region. Salem Memorial is the only acute care facility in the region and it is needed to provide medical care.”

Sweeney, joined at a news conference outside the hospital by Deputy Assembly Speaker John Burzichelli and Assemblyman Adam Taliaferro, also Gloucester County Democrats, along with bipartisan local elected officials, nurses and doctors, said the funds would be used by the Inspira Health Network, which wants to buy the hospital.

Inspira currently operates hospitals in Cumberland, Gloucester, and Salem Counties.

Salem County’s other hospital, Elmer Hospital, is operated by Inspira, but is 25 miles from the county’s main residential areas.

“We regularly consider potential programs and affiliations as part of our commitment to improving the lives of all we serve,” Inspira spokesman Paul Simon said in a statement Wednesday. “Because some ideas we explore do not come to fruition, we make no public comments about our strategic planning until our plans are final and ready to move ahead.”

The lawmakers said Community Health Systems, Memorial’s industry-giant parent company, has been trying to complete a deal with Inspira, but the trust fund is key to the transaction. The trust fund, designated as “charitable assets,” was sent several years ago by the Salem Foundation to the Community Foundation of New Jersey in Morris County, Sweeney said.

“The Community Foundation of New Jersey and Salem Health and Wellness Foundation remain open to on-going conversations with all parties to deliver improved health and wellness to the people of Salem County,” Brenda L. Goins, executive director of the Salem Health and Wellness Foundation, said in a statement. “As with other potential acquisitions of the hospital, we have expressed a willingness to support the purchase with an investment from the foundation.”

Goins confirmed that the foundation has “spoken several times” to Inspira about its bid to acquire the hospital. Under the law, the foundation has the first option to buy the hospital.

Memorial Hospital is the only acute-care facility in Salem County and the only one operated by Community Health System in New Jersey. It was also one of the largest employers in the county of 63,000 people, but staffing has dwindled from about 500 employees to about 250 amid uncertainty about its fate, Sweeney said.

Community Health Systems officials did not respond to a request seeking comment. Based in Franklin, Tenn., it is one of the country’s largest providers of general health-care services. It operates six hospitals in Pennsylvania, including in Scranton, Wilkes-Barre, and Berwick.

The hospital was sold in 2002 to Community Health Systems for $35 million after a law was passed to allow for the purchase of the nonprofit hospital by a for-profit entity. It was the first such purchase in New Jersey by a for-profit health-care system. The funds were invested and have grown to $51 million, Sweeney said.

Under the legislation, the sale proceeds were earmarked to establish the trust fund to provide to Salem County residents health services not offered by the hospital. Salem County is the second-poorest county in the state. Since 2014, the fund has distributed $4.5 million in grants to 52 community groups, Goins said.

“We have a fiduciary responsibility to ensure these funds are used to support the most effective health and wellness programs in the county,” Goins said.

Goins said the $51 million trust fund was moved to the Community Foundation of New Jersey to augment the work of the hospital’s foundation. The funds are earmarked for health and wellness work only in Salem County, she said. The Community Foundation serves all of New Jersey.

Lawmakers grew dissatisfied with the operation of the hospital and passed another law in 2015 clearing the way for a nonprofit to buy Memorial, but that sale fell through, Sweeney said. Yet another potential deal, with Prime Healthcare Foundation, unraveled at the last minute last spring.

The 2015 legislation allows for a new nonprofit to use the foundation money to buy the hospital if Salem Health and Wellness Foundation opts not to purchase it, Sweeney said.

“Our big concern is that this hospital closes,” Sweeney said in an interview Tuesday. “It’s a real threat and it’s a real concern.”

The lawmakers said legal action may be taken in Superior Court seeking to transfer the funds back to Salem.

“There is a risk that the hospital would be forced to close, which would be catastrophic for the region,” Burzichelli said in a statement.

Sweeney said the trust fund would be needed by any potential buyer to make upgrades to the hospital.

The 126-bed hospital has been struggling for years, losing money, patients, and staff. It closed its maternity ward in 2014. Cooper Health System took over operations of its emergency room several years ago.

Memorial Hospital was founded in 1919 in downtown Salem City. It moved to its current location in Mannington Township in 1951.