Hospital Closings, Nonprofit Corporations and Unregulated Asset Transfers

The closing of the Muhlenberg Regional Medical Center (MRMC) by Solaris Health System (Solaris) may have violated the Articles of Incorporation of the MRMC and the Muhlenberg Foundation (MF). The MRMC was founded “for the purpose of care, cure, and nurture of sick and injured persons” which “are to be carried out in the City of Plainfield and its vicinity.” The Muhlenberg Foundation was formed to be operated exclusively for the benefit of the Muhlenberg Hospital and was the principal fund raising arm of the hospital.


In 1997, John F. Kennedy Hospital (JFK) of Edison, New Jersey was merged with the Muhlenberg Regional Medical Center (MRMC) of Plainfield, New Jersey, which formed Solaris Health System. It was called a pooling of interests on the Consolidated Financial Statement of Solaris Health System. After the merger, Solaris gained $44 million in assets. Prior to the merger, Solaris had net assets of $109 M. After the 1997 merger, Solaris had $153 M in net assets. Included in the assets that were acquired by Solaris was the Comprehensive Health and Educational Corporation, a for-profit corporation.


At the time of the merger, Solaris told the employees that it was a kind of partnership and that no one partner took the other over. But soon after the merger, assets started to be transferred to JFK Hospital or sold. As early as 1997, Associated Radiology was replaced by the radiology group affiliated with JFK.



 1998 - The Diabetes Center was moved to Talmadge Road in Edison, NJ.

 2000 - SurgiCare of Central New Jersey was sold by Solaris in.

 2001 - The Dialysis Center, located at the Kenyon House, was sold.



Since 2003 Solaris Health System has moved a number of very successful operations from Muhlenberg to JFK Hospital. Some of the functions transferred to JFK include: Pediatrics, Out-patient Physical Therapy, Orthopedics and in-patient Oncology.


Did Solaris Health System misrepresent the financial condition of Muhlenberg Regional Medical Center in order to win the approval of the State Commissioner of Health and Senior Services to close the Hospital? The Federal Exempt Organization return (Forms 990) filed under the penalty of perjury with the Internal Revenue Service shows a much stronger financial picture than the one reflected on the MRMC Consolidated Statement of Operations for the years 2005, 2006 and 2007. Profit/ (Loss) before Depreciation and Interest were:



 $9.9 M Profit in 2005

 $4.7 M Profit in 2006

 $4.6 M Loss in 2007



As of December 31, 2007, the MRMC was a solvent corporation and had net assets of

$ 5.2 M. Even after MRMC was stripped of many profitable assets by Solaris, it was still a financially viable corporation. At the New Jersey State Health Planning Board meetings in Plainfield, New Jersey pertaining to the closing of the MRMC, a number of speakers questioned the losses reflected by the MRMC. At least one speaker suggested that an independent CPA firm be appointed to evaluate this matter before a decision was reached on the Certificate of Need for closure. The pleas of the speakers were ignored. Below is a summary of the difference between the numbers reflected on the IRS Form 990 return and the MRMC Financial Statements:


Year Financial Statement IRS Return

2005 1.5 M Loss 2.3 M Profit

2006 2.9 M Loss 2.5 M Loss

2007 16.7 M Loss 11.9 M Loss



IRS Profit/ Loss before Depreciation and Interest

Year Profit/Loss Depreciation/ Profit/ Loss

Interest

2005 2.3 M Profit 7.6 M 9.9 M Profit

2006 2.5 M Loss 7.2 M 4.7 M Profit

2007 11.9 M Loss 7.3 M 4.6 M Loss


In 2007 the Muhlenberg Foundation transferred the stock of Midtown Shops Corporation, a firm that has extensive holdings of commercial real estate, to the Muhlenberg Region Medical Center. The Muhlenberg Foundation received the Midtown Shops stock as a pledge from the Harold B. & Dorothy A. Snyder Foundation in 2007 and valued it on their books at $4.7 million, which included $200,000 in cash. Prior to the stock being controlled by the Muhlenberg Foundation, the Snyder Foundation received a yearly dividend of $109,000 from Midtown Shops Corporation. The purpose of this transaction needs to be questioned. Was it done in good faith? Why was Midtown Shops stock transferred from the Muhlenberg Foundation within months after the Foundation received the total pledge, which was settled over a period of three years? Also, the value of the real estate holdings of the Midtown Shops Corporation must be determined by an independent appraiser. In addition, the Muhlenberg Foundation is the majority owner of the Comprehensive Health and Education Corporation (CHC). The value of this for profit corporation must be determined. In 2008, MRMC assets were transferred to JFK Hospital even before the closing of the Muhlenberg Regional Medical Center was approved by the State Commissioner of Health and Senior Services. These items included hospital beds, computers, nursing and operating room equipment.


A review of the 2007 IRS Form 990 for the MRMC indicates that a $150,000 loss on the sale of property and equipment needs to be reviewed and verified. Was it a bonified loss? Finally, MRMC restated its previously issued financial statements in 2007 to correct errors made in 2006 and in prior years that related to interest in perpetual trusts that were not recorded on the books in earlier years. These perpetual trusts have a value of $2.4 million. The trust covenants need to be reviewed to ensure that the endowments restricting the funds for uses in Plainfield are being followed.


Solaris Health System controlled the Board of Directors of the MRMC and the Muhlenberg Foundation. When you review all the transactions over a period of years that were directed by Solaris, it appears that Solaris might have orchestrated actions between the related corporations that are considered prohibited transactions. The Board of Directors of the MRMC and the Muhlenberg Foundation may not have acted independently. They allowed Solaris to close the hospital without conducting their own needs assessment or impact study. The Board of Directors never considered operating the Hospital independently. Thus, the tax exempt status of Solaris Health System is in question. Should it be revoked?

Our Nominee For The NJ Governor's Jefferson Award

Kinyarwanda

Alrick Brown, graduate of Plainfield High School, Rutgers, and NYU, is an award winning internationally renowned filmmaker, earning numerous awards and honors. His first feature film “Kinyarwanda” won the prestigious 2011 Sundance World Cinema Audience Award, and received three NAACP Image awards nominations. Brown took a group of Plainfield, NJ students to Sundance, for a once in a lifetime opportunity to document his journey. An entire PHS class was cast and included in all aspects of filming during the making of Kinyawaranda, positions both on screen and behind the scenes. A highly sought educator and consultant on the art of storytelling and film, Alrick found his calling in Ghana while serving as a Peace Corps volunteer in Cote d’Ivoire. Alrick is a bridge builder, whether connecting students in NJ to a village in Africa or showing cooperation between Muslims and Christians in “Kinyarwanda.”


For over twenty years he has translated his compassion for humanity, into works of art and service by telling stories that otherwise would not be told; teaching tolerance, forgiveness, and perseverance. In 2009 he directed the play, “A Raisin in the Sun” utilizing local talent in Plainfield, and is currently working with a history class to produce a documentary; and has been the guest speaker for Plainfield PAL's Youth Exposure for three years, which is a mentoring program for middle school students in Plainfield, NJ. Alrick has tirelessly and consistently served every community that he has been a part of, from the Ivory Coast, to NJ and the hallowed halls of Rutgers and NYU. His volunteerism and determination serves as a standard of what one can do when motivated by a willingness to serve. By nominating Alrick for this prestigious award, I am confident that his work in the shadows and background will shine in the light.

Special Request - Most Popular Document

Muhlenberg Foundation IRS 990 Financial Analysis

Special Request - Second Most Popular Document

MI - Sen Vitale Releases Legislative Motives for Muhlenberg Closure

A Look At The Bi-Partisan Save Muhlenberg Coalition

Muhlenberg in Morristown NJ Health Dept Data

Muhlenberg in Morristown

Muhlenberg in Morristown

Gov. Corzine and Health Commissioner Heather Howard placed the communities served by Muhlenberg Regional Medical Center in the Morristown Service Area, in a document designed to "Rationalize Healthcare" through a heavy focus on hospital closings and the resulting redistribution of health care resources.

This expensive, outsourced perspective on New Jersey geography was developed by the same consultants that produced the very short, controversial, travel times to alternative acute care hospitals. This, now "historic" report cost taxpayer dollars when accurate data could have been calculated, in house, by weights and measures or by google and mapquest, for free.

The other Hospital Service Area options include New Brunswick that borders communities served by Muhlenberg and are listed in the travel times to alternate sources of care. At least the Newark service area is accessible by public transportation. Seniors and people without cars can reach Robert Wood Johnson, in New Brunswick, by taking multiple trains with a change in Newark.

The Neighborhood Health Center, long ago moved virtually out of Plainfield, and now borders Greenbrook and Dunellen in Somerset and Middlesex Counties. These women who tend not to have cars, were sent to Elizabeth, virtually Newark, to give birth? A long way to transport a woman in labor and a difficult trip to visit a newborn that doesn't come home with the mother. At the very least, Elizabeth should have been restored to the Raritan Valley Train Line. People doing business with Union County and the court system would help make the route more profitable.

Have you ever tried to get to Morristown from Muhlenberg? Why was there no travel time to Morristown included in the alternatives to care at Muhlenberg?

New Jersey Acute Care Hospital by Market Area
http://www.nj.gov/health/rhc/finalreport/documents/appendix_3.pdf

Memorial Stone

Elkanah Fitz Randolph and his tombstone were moved from the Seventh Day Baptist cemetery to another Plainfield Area cemetery in 1903.  The people interred in the Seventh Day Baptist Cemetery, which was located at West Ninth Street and Arlington Avenue, had to be moved to other local cemeteries because the land was purchased by the City of Plainfield to build Plainfield High School.

Elkanah Fitz Randolph was President Barack Obama's 5th cousin 6 times removed.

Photograph taken by NAP
copyright 2012 NAP