2012-04-13 / Front Page

Last Ditch Court Effort Fails To Keep PHC Open

By Howard Schwach

Following months of efforts by its staff and the community it served for more than 104 years, the Peninsula Hospital Center closed its doors at 11:59 p.m. on Monday, April 9.

Whether the closing will be for good, or only until a new operator is found, remains to be seen. On the week of its closing, the situation is as cloudy as a foggy day at the beach.

The key to the answer to that question lies in the hospital’s operating certificate, which is in the hands of Lori Lapin Jones, the Chapter 11 Bankruptcy Trustee appointed by the federal court last month.

“The state’s Department of Health has requested that the operating certificate be turned in and it probably will be sometime today or tomorrow,” attorney John Macron said early Tuesday morning. “If the operating certificate is in place, the building can be sold as a hospital. If not, then the new owners will have to go through the entire process of going to the state for a certificate all over again.”

A sign on the door of Peninsula Hospital Center tells those in need of health care to go to SJEH in Far Rockaway. A sign on the door of Peninsula Hospital Center tells those in need of health care to go to SJEH in Far Rockaway. “If it is not in place,” Macron added, “It will probably never be a hospital again.”

Macron and some former board members spent nearly ten hours on Monday negotiating with Jones and her attorneys and with Chicago doctor Seth Guterman, who said last week that he had $20 million to buy the troubled hospital.

Macron had filed a motion in federal court on behalf of hospital staffer Wayne Dodakian, joined by former board members Joe Mure, Lou Caucig and Steve Greenberg, who sought to have Jones removed from her federal appointment on the grounds that she was not protecting the rights of the creditors or the community.

Blue masking tape covers the name of the hospital. Blue masking tape covers the name of the hospital. That motion was withdrawn early in the day, however, when it was found that Guterman simply “wanted to lend the hospital the money and then sell them medical software.”

With the Guterman deal off the table, it became clear that the motion would not prevail and it was withdrawn.

Macron said that Revival, the group running the hospital since September of last year, came in with a bid to save the hospital, but that Jones told Macron and the former board members that the bid from Revival would not be acceptable to the state. Steve Zakheim, admitted at the Tuesday night meeting in Rockaway that it was he who gave the Revival money to PHC in September, keeping the building open. Under a 2005 agreement with the state, however, Zakheim is restricted from having anything to do with Revival or any of its businesses. That agreement was signed to allow Zakheim to escape federal charges of fraud involving Medicaid money paid to his ambulance business.

A last ditch rally at the Department of Health in Manhattan failed to sway DOH officials. A last ditch rally at the Department of Health in Manhattan failed to sway DOH officials. Dodakian told The Wave that he withdrew the suit for several reasons, the main one being that, with the Chicago offer dropping to a minimum amount of money, two of the former board members who had joined the suit believed that they could no longer be involved.

“Without board support, I had less chance of winning, and I did not want to be a divisive factor with the board,” Dodakian said.

Kenny Ford, who has been a pharmacist at the hospital for more than 35 years and who officially retired on Tuesday, was at the court meeting.

Ford said that he and a number of other PHC staffers were in the courtroom speaking with Daniel McMurray, a court-appointed ombudsman, when McMurray admitted to them that the closing was a done deal.

Dr. Seth Guterman speaks to a standing room only crowd at the Knights of Columbus Hall last week. Dr. Seth Guterman speaks to a standing room only crowd at the Knights of Columbus Hall last week. “The government wants to close portals to health care,” McMurray reportedly told the startled staffers. “The fewer facilities [such as hospitals] the less often people will use the facilities and the fewer dollars the government has to spend on health care.”

The closing will leave 1,000 employees unemployed and more than 120,000 residents with only one hospital, and that one at the extreme eastern end of the peninsula, 20 minutes or more from residents who live in the west end.

Mure was saddened by the closing.

“We were dealt a bad hand by [former owner] MediSys,” Mure told The Wave. “We negotiated all day long on Monday and I thought that we were close to a deal with Guterman, but his offer turned out not to be what we thought and there was no deal. We tried to get it done prior to losing our operating certificate, because once that is gone, it becomes a long-term process to get it back.”

Both Macron and Mure expect that the nursing home will be sold first and will remain in operation, but that the hospital building will be “sold off in pieces,” which will allow the creditors, including local 1199, the healthcare union, to recoup the millions it is owed by the hospital, most of it in terms of health care payments for its workers. Both Ford and Mary Burke, who has been an RN at the hospital for more than 30 years, believe that the union sold out the workers in order to recoup the money.

“Susan Heppner, the union’s attorney, told the nurses at an open meeting that the union was with them,” Burke said. “Meeting behind closed doors, she said that the union would rather have the money than drag out the process.”

She did promise to find jobs elsewhere for us,” Burke added.

Jones has retained Loeb and Trooper LLP as a health care transaction advisor and broker to market the hospital. When the court approves that contract, then People’s Choice Hospitals will have to compete with several other bidders for the hospital.

Insiders say that Jones met with Guterman and was not impressed either by his credentials or by those of his organization.

A quick check of the web by The Wave failed to come up with any definitive information on People’s Choice or on any hospitals saved by the company.

Guterman does have several businesses registered to the same Illinois address, including Empower Systems, a company that specializes in health care software.

When asked by The Wave for his contact numbers, his business card for Empower Systems was the one he provided.

And, while that company’s website touts Guterman as a “turnaround expert,” it lists no hospitals he has turned around.

Dodakian said that they called Guterman from the courthouse and he told them that he only had $3 million now, not the $20 million he had promised the community last week. Guterman promised the other $17 million when the laboratory was recertified and only if the hospital’s certificate of operation were in place.

While Guterman later promised to raise that number, Jones would not accept that bid.

Richard Cook, a spokesperson for the state’s Department of Health, said this week that the information from People’s Choice and other bidders was being “sorted through by [Jones], who will see if the offer is credible.”

He added that no matter the case, the laboratory will take several months to fix and that is essential if the hospital is to reopen.

“I have not yet seen or heard that there was a credible proposal that recognizes the situation on the ground,” he added.

For now, he said, Jones will follow the closure plan approved by the DOH.

She did, and on Monday afternoon, a large sign appeared on the hospital’s front door announcing that the hospital was closed and that those in need of medical services should go to St. John’s Episcopal Hospital in Far Rockaway.

In addition, the name of the hospital on the entranceway was covered over with blue masking tape.

“It’s sad,” Macron said. “So many people worked so hard to keep the hospital open and now it is closed.”

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