UNION COUNTY — Although county officials continue to deny a decision has been made to sell Runnells Specialized Hospital, sources at the highest level confirmed two weeks ago a sale is already in the works and an announcement may be imminent.
According to multiple sources, in the last two weeks the Union County Freeholder Board has met several times to go over Request for Proposal responses received by the Union County Improvement Authority.
In July 2013 the freeholder board took the next step toward unloading the 100-year-old, 300-bed facility that sits on 45-acres of county-owned land in Berkeley Heights by tasking the Union County Improvement Authority with marketing the sale or lease of the hospital.
This move paved the way for either lease or sale of the facility that taxpayers have had to subsidize by $17 million a year because of declining Medicaid and Medicare reimbursements. Due to these reductions in aid the county is only receiving $222 per patient instead of the $300 needed to operate without subsidies.
While initially fighting the sale, it became apparent in the last two years the county had no other option but to find a way to cut this financial burden. In the last several years the county had to subsidize Runnells by more than $30 million and previously consultants indicated this scenario was not about to get any better.
In fact, just recently in his proposed budget, County Manager Al Faella mentioned that that the county was deeply involved in seeking a solution to what should be done with Runnells. The county manager also hinted that the search for this solution may be coming to an end.
“We are now at the conclusion of the RFP process that will determine the future steps needed to ensure Runnells can operate in a fiscally sustainable manner,” he said in a statement, adding the county expected “a final decision to be made in the next few months.”
Although the option of leasing the hospital was on the table, according to one source close to the deal, RFP’s resulted in prospective buyers offering anywhere from $20 to $25 million or more for the hospital.
In October, a Pennsylvania consulting firm reported a study they performed estimated that the facility could be sold for between $22.4 million and $25.8 million through a sale. A sale or lease would also relieve the county from pension and healthcare benefit obligations and put the hospital on the tax rolls, meaning the new owner would be required to pay taxes.
One of the major concerns the freeholder board had about the lease or sale of Runnells was the effect on staff. Longtime employees have been concerned about their future employment at the hospital should it be sold.
Rumors the county had zeroed in on selling the facility spread fast and the county manager quickly moved to calm any rising concerns.
Monday Faella sent a memo to all Runnells Hospital employees to let them know that while there “were many stories circulating,” no decision had been made regarding the sale of the facility.
In the memo, he stressed that the county owned hospital will “continue to be a hospital” under all scenarios being considered.
“As of this time, no decision has been made on conditions under which Runnells will continue to operate but we want to emphasize that Runnells will continue to be a hospital under all scenarios being considered,” he said, noting the freeholder board “is still in the process of assessing options for the continued operation of Runnells.”
Even though the freeholder board has met several times to hear the results of all RFP’s received by the UCIA, and have selected a buyer, Faella did not mention this at all. Several sources said that the county had no other option but to sell the facility since the money it would generate was high.
In his memo to Runnells employees, however, Faella stressed that any option the board was considering included “keeping Runnells hospital operational.”
“The freeholders are very much aware of the issues that have been raised pending a decision on these three options and we can assure you that continuity and quality of care are at the forefront of the proposal process,” Faella said in his memo.
He also pointed out that once a proposal has been selected, there will be public hearings and other opportunities for all stakeholders to contribute to the final decision. These dates will be made public on the county website, he said, and through the media.
According to several sources, the private company purchasing the facility will allow certain Runnells employees to reapply for the positions they currently hold.