Wall Street Journal
Monday, October 17, 2011
JOSEPH DE AVILA

A plan to resurrect a shuttered New Jersey hospital—potentially the first such facility to re-open after two decades of closures in the state—is drawing fire from competing medical centers that say it would weaken health care in the region.

Hackensack University Medical Center in Bergen County is moving forward with plans to re-open Pascack Valley Hospital as a 128-bed for-profit medical facility. The state’s Health Planning Board is now reviewing the plan, and Mary O’Dowd, the state’s health commissioner, is expected to issue a final decision by the end of the year.

But competing hospitals said the drive to re-open the hospital has become politicized and is not based on sound health-care policy.

Adding another hospital in the region, they say, will make it more difficult to survive for other Bergen facilities that are already operating on slim margins.

Many of the employees who would be hired back to Pascack—in the borough of Westwood, N.J.—would likely be pulled from existing medical facilities as well, critics say.

Gail Callandrillo, vice president of strategic planning and government relations at Valley Hospital in nearby Ridgewood, said re-opening Pascack “would totally destabilize a very shaky market.”

Nearly two dozen New Jersey hospitals have closed in the past 20 years, including Pascack Valley in 2007. None have re-opened, but Hackensack officials said Pascack Valley would immediately fill a void. “The hospital didn’t close because of a lack of need,” said Robert Garrett, president and chief executive of Hackensack. “We think there is a good need for beds.”

Hackensack has teamed up with Texas-based LHP Hospital Group Inc. to run Pascack Valley Hospital.

About $60 million of renovations on the hospital have been proposed.

But the plans have met vociferous opposition. Douglas Duchak, chief executive of another competing hospital, Englewood Hospital and Medical Center, fired off a letter to the state’s health commissioner expressing his “outrage and disappointment” over the department’s recent decision allowing Hackensack’s application to move forward despite objections from Englewood and Valley Hospitals.

“Principally, there is an oversupply of beds in the area that continues to grow,” said Mr. Duchak. There are about 2,000 hospital beds in Bergen.

Westwood Mayor John Birkner calls the criticism “disingenuous and self-serving.”

“I think their opposition to Hackensack is purely a competitive one,” Mr. Birkner said.

Pascack was founded in the 1950s as a nonprofit hospital. In the past decade, its finances were strained when it lost a crucial health-insurance contract and got saddled with debt from a major construction project.

When it closed, nearly 1,000 jobs were lost.

“The impact on the senior-citizen population has been particularly dramatic,” said Mr. Birkner, who has been a vocal supporter of reopening Pascack.

In 2008, Hackensack bought Pascack at a bankruptcy auction for $45 million with plans to reopen the hospital.

When the hospital closed, it had 291 beds. The new plan would reduce that number by more than half.

“We were very careful in how we sized this facility,” Mr. Garrett said. “We didn’t want this project to have an adverse effect on other providers in the area.”

Write to Joseph De Avila at joseph.deavila@wsj.com