Struggling CarePoint Health could lay off 2,600

Dive Brief:

• CarePoint Health could lay off more than 2,600 employees effective Dec. 12, according to notices filed with New Jersey regulators this week.
• The proposed cuts would impact workers across the three-hospital portfolio, including 859 workers from Bayonne Medical Center, 843 workers from Christ Hospital in Jersey City and 900 workers from Hoboken University Medical Center.
• A spokesperson for CarePoint said in a statement that the “three local hospitals are not facing any imminent threat of closure and no final decisions regarding layoffs have been made at this time.”

Dive Insight:

The Bayonne, New Jersey-based health system cited “daunting financial challenges” as a motivating factor for the possible layoffs.

The three-hospital health system’s finances have been precarious in recent years, drawing attention from the New Jersey Department of Health last fall. In October, the department sent a letter to state lawmakers warning that CarePoint’s Hoboken University Medical Center was “in financial distress or at risk of financial distress.” 

The letter warned that the health system was operating with low margins — -14% as of July 2023 — and carrying less than a month of cash on hand. The system had also sent requests for advances on charity care subsidies totaling more than $9 million multiple times between 2022 and 2023, citing “cashflow and other financial issues.”

The health system’s financial situation has further deteriorated this year, according to a report from the Jersey Journal. The state has stepped in at points to heavily subsidize its payroll and dozens of creditors have filed lawsuits against CarePoint alleging they haven’t been paid for services.

And in February, the state’s Department of Health became so concerned it ordered the system to create “disaster plans” for its hospitals, outlining plans for possible closures or disruptions of services.

CarePoint signed a letter of intent to form a new regional healthcare management system with Hudson Regional Hospital in January — a move that could have offered some financial stability.

However, Hudson Regional sued to get out of the deal in June, accusing CarePoint of being uncommitted to the merger process. For example, the complaint said CarePoint delayed providing Hudson Regional with requested data.

At the same time, CarePoint was also pursuing a second deal — this one with Insight, a Michigan-based hospital management company.

Insight and CarePoint were working on a behind-the-scenes deal this spring to offer CarePoint quick access to liquidity and stabilize its hospitals, according to Hudson Regional’s complaint. CarePoint confirmed it was in talks with Insight in March. 

Now, the system is reportedly meeting with its board to explore a Chapter 11 bankruptcy restructuring, according to the Jersey Journal.