2012-04-06 / Front Page

Another ‘White Knight’ For PHC?

Slated To Close Monday, Chicago Doc Makes Bid
By Howard Schwach


Steve Zakheim, (right) who told the crowd that he provided the money to keep PHC open, speaks with a resident after the meeting. Photo by Howard Schwach. Steve Zakheim, (right) who told the crowd that he provided the money to keep PHC open, speaks with a resident after the meeting. Photo by Howard Schwach. The first white knight knew nothing about slaying dragons and eventually he was eaten alive largely because he chose the wrong squires and failed to understand what needed to be done.

On Tuesday night, a second white knight came riding in from the Windy City of the west with $20 million in his saddlebags and the stated expertise to finally put the dragon away for good and save the fair maiden.

The question is, does the fair maiden want to be rescued by the white knight. Sources at the hospital told us that the fair maiden, in the guise of Federal Bankruptcy Trustee Lori Lapin Jones, wanted nothing from the new white knight and even refused to speak with him about how the dragon might be slain and how the hospital might be saved.


Guterman is introduced by former hospital staffer Liz Sulik, who hosted the meeting. Guterman is introduced by former hospital staffer Liz Sulik, who hosted the meeting. At a public meeting on Tuesday night, with more than 450 staff and residents looking on, however, Dr. Seth Guterman, the Chicago White Knight, told The Wave that a meeting among him, Jones, representatives of Local 1199 of the Healthcare union, the hospital’s major creditor and the Department of Health would be held on Wednesday, April 4. While the meeting was held, its outcome is being closely held by the parties.

Guterman, the president of an umbrella company made up mostly of doctors, rode into Rockaway on Tuesday night to pitch his claim to local residents who want to keep the hospital open.

Guterman said that his company, People’s Choice Hospital, has the cash, the technology and the expertise to turn around the foundering facility and bring it back to health. “There are problems that need to be solved,” he said. “If all the parties are reasonable, however, there is a deal to be struck.” He added, “[PHC] needs senior management that knows how a hospital operates. We have turned around a number of financially instable hospitals, and we know how to do it. We are the only ones who bring under one umbrella the funding, the expertise and the technology necessary to do the job.


The Tuesday night meeting was standing room only and was often contentious. The Tuesday night meeting was standing room only and was often contentious. “I have a $20 million funding commitment with me tonight and have been promised more by others, such as Revival.”

Speaking of Jones, he says, “There’s a moral commitment to [the Rockaway community] when there’s a decent option on the table.”

Praising the workers in the audience who fought since July to keep the hospital open, Guterman said, “Nothing happened and nothing would have happened to keep the hospital open if you had not led the fight. Maybe the hospital does not need to close. You have kept it open and I want you to succeed. I want you to keep the hospital open.”


Hospital operating committee members Lou Caucig (left) and Steve Greenberg (center) speak with resident Marvin Eisenstadt. Hospital operating committee members Lou Caucig (left) and Steve Greenberg (center) speak with resident Marvin Eisenstadt. Senator Malcolm Smith presented a timeline of his interactions with the DOH and Jones, claiming that he has been active in trying to resolve the problem.

The crowd, however, was not buying his activism, booing him and challenging him to do something.

When he said that he was unhappy with Revival’s management of the hospital, Steve Zakheim, whose wife is registered as Revival’s owner, got up and told Smith and the crowd. “I am the one who gave PHC the money to stay open.”

He angrily attacked Smith for his comments, saying that the laboratory report was not all that damning and that the state has an agenda to close the hospital down.


Dr. Seth Guterman speaks with PHC staff prior to the meeting. Dr. Seth Guterman speaks with PHC staff prior to the meeting. At times, the meeting turned into a morality play, with heroes cheered and villains booed.

The two major villains of the evening were apparently former CEO Robert Levine and Jones, who were booed at every turn.

Sources contend that Jones is not interested in keeping the hospital open, but in recovering all of the money she can for the hospital’s creditors, especially for Local 1199.

They point to the fact that Jones could come out of the hospital’s closure with a large payday.

Under federal bankruptcy law, trustees can receive a maximum of three percent of every dolllar they are able to turn over to the creditors, at the discretion of the bankruptcy judge hearing the case. And there are millions at stake.

Jones quickly ordered the hospital closed two weeks ago, after the state’s Department of Health said that its clinical laboratory was “months, not weeks” from being able to reopen.

Local officials and staff members, however, said that the lab was ready for a state inspection.

State officials admitted last week that they never inspected the lab prior to saying it would need months to fix, that the closure was based on faulty documentation presented by the hospital.

“The procedure when a lab is shut down because it poses a health and safety risk to both patients and employees is for the facility to put together a detailed plan of correction that states how they will correct the root causes of the problem,” said Health Department spokesperson Michael Moran in an email to The Wave. “[That document] describes a plan of action to correct the substandard practices, the implementation date, and provides a statement that the laboratory has evaluated relevant procedures and practices in all sections of the laboratory for compliance.”

Moran added, “The plan submitted by Peninsula for preliminary review was inadequate on all of these three measures, and the trustee was informed of that. No physical inspection would take place until an adequate plan of correction with implementation dates was complete.”

Locals, however, ask how the department and the trustee can close down a vital community asset without at least taking a look to see what it had completed in the wake of the late February shutdown order.

Susan Greene has been working at PHC for 41 years.

“The laboratory is now state of the art,” she said. It’s up to snuff and it’s perfect to go. The Department of Health and the trustee want to shut us down for some reason and they’re not even coming here physically to see the new laboratory and what we have done. They would find that our machines are up and running, calibrated, validated. You name it, and it’s ready to go.”

Operating board member Joe Mure, a local attorney, said that, when Jones first took over the hospital early last month, she said that she would try to save the hospital.

“She said she would do whatever she could to keep the hospital open,” Mure said.

Jones has refused to speak with reporters about the situation at PHC.

She was appointed last month in the wake of a December 2011 internal report and the DOH’s closure of the lab in February.

Federal law allows the appointment of a trustee in bankruptcy cases for several reasons, including gross mismanagement and fraud.

Jones was appointed by the court to oversee the bankruptcy and to insure that the creditors get all they can out of the final bankruptcy plan, not to save the hospital for the community, legal sources say.

In last week’s edition, The Wave wrote that Local 1199 of the Healthcare Workers Union had filed for an injunction asking to keep the hospital open. That was incorrectly reported due to a misunderstanding between Leah Gonzalez, a spokesperson for the union, and Wave editors. When asked why the union was not filing an injunction to keep 700 workers at their jobs, Gonzalez said this week that we would have to ask the union’s attorneys for an answer to that question.

The hospital is now slated to be closed at 9 a.m. on Monday, April 8.

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