Meadowlands Hospital Medical Center Bought By Real Estate Developer Yan Moshe

CORPORATE STRUCTURE

Meadowlands Hospital Medical Center (MHMC) is a for-profit hospital owned by MHA LLC since its purchase in 2010. Prior to the 2010 sale MHMC was a non-profit hospital owned by Liberty Health System, also the former owner of Jersey City Medical Center. Founded in 1976, MHMC has 204 licensed beds, although it has maintained an average of just 28 patients a night in recent years.

Four partners make up MHA LLC Richard Lipsky, Tamara Dunaev, Pavel Pogodin, and Anastasia Burlyuk; the purchase in 2010 was valued at $17.5 million with the original financing provided by Eastern Union and Investors Savings Bank.

Real estate developer Yan Moshe is currently in process for buying MHMC for the price of $12.2 million with a deposit of $5 million and the balance to be financed by the current owners. The new ownership entity will be known as NJMHMC LLC. In addition, Moshe is paying $26 million for the land the hospital sits on, which was sold in 2012 by the current owners in a sale-leaseback deal.  Mr. Moshe is the current owner of Excel Surgery Center in Hackensack, and has no previous experience owning, operating, or managing acute-care hospitals.

With the hospital situated near the long-delayed American Dream mega-mall, MHA LLC made an exclusive deal with the mall developers, to pay them $6.6 million over a ten-year period, so the hospital can run two first-aid stations and a wellness center at the mall, with two ambulance bays at the mall for transporting patients to MHMC. The Letter of Intent and its terms outlining this deal is considered part of the assets being acquired by NJMHMC LLC.

CERTIFICATE OF NEED

Since this is a sale of one for-profit hospital to another for-profit entity the transaction is required to go through the Certificate of Need (CN) process through the New Jersey Department of Health’s (DOH) Division of Certificate of Need and Licensing. This sale is exempt from the CHAPA process because it is a sale between two for-profit entities.

The 125-page CN application was received by the DOH on July 1, 2016. It notes that the proposed new owner intends to maintain the number of licensed beds and the scope of services as well as retain substantially all current employees.

ASSET PURCHASE AGREEMENT

Contained within the CN application is the Asset Purchase Agreement (APA), which provides definitions of terms used throughout the document and outlines all the assets that are included in the sale, including all inventory, intellectual property assets, furniture, the Medicare/ Medicaid provider agreements, and all contracts. Excluded assets consist of all cash and cash equivalents, all accounts receivable and notes receivable of seller as of closing, seller’s ownership interest in the Cancer Center entity, the seller’s license issued by DOH to operate a 30-bed rehabilitation facility, and the Secaucus condo owned by seller.

Terms and conditions of payment of purchase price are described, as well as terms for the actual closing. Covenants include: the buyer shall offer employment to all current employees on the closing date; offer retirement, severance, and welfare benefits that are no less favorable than the current benefits; and the buyer has the right to terminate any employee during a 90-day probationary period unless it violates a contract or law. Exhibit D of the APA contains the CN approval letter from the DOH, setting the conditions that the MHA LLC was required to meet in 2010 as the new owners of MHMC. Similar conditions will be placed on NJMHMC LLC if the DOH approves the CN application.

Click here to see the Asset Purchase Agreement.

SALE APPROVED BY STATE BOARD

The NJ State Health Planning Board approved the sale of Meadowlands Hospital Medical Center to Yan Moshe on November 21, 2017 in a unanimous vote. The Board’s decision read in part, “After carefully reviewing the data, Department staff believes that this transfer of ownership of MHMC to NJMHMC will not result in any negative impact on the community or patients that the hospital has historically served, or on other area hospitals. This transfer, the only option presented to the Department, would be the least disruptive to the area’s health care delivery system at this time.”

ACTING COMMISSIONER OF HEALTH GIVES FINAL APPROVAL

The transfer of ownership was given final approval by state Acting Commissioner of Health Christopher Rinn, one day after the Board’s action. Acting Commissioner Rinn had up to 120-days to make a final decision on the sale. Commissioner Rinn stated in his letter giving final approval that, ” My decision to approve this transfer of ownership is based on my belief that the operation of MHMC under the proposed new ownership would be beneficial to the population in its service area and will preserve access to health care services for the community, including the medically underserved population.”

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