June 5, 2007
The Star-Ledger
Angela Stewart

Loose Lips Jumps Ship

A Kentucky-based firm has purchased Mountainside Hospital in Montclair from Atlantic Health for $30 million, officials said yesterday.

Just hours before the deal went through, the hospital's entire staff of anesthesiologists, some of whom had been with Mountainside for more than 20 years, were fired.

"To me, there's blood in the streets already," said Eugene Pugatch, former chief of neurology at Mountainside.

The eleventh-hour notice to Montclair Anesthesia Associates, informing them the services of the approximately 20-member physician group would no longer be needed, came in a letter from Atlantic Health's general counsel on Thursday, 10 hours before the transfer took place, said Philip Luz, the anesthesia group's managing partner.

A spokeswoman for Merit Health Systems, the Louisville-based company that took ownership of the 347-bed hospital on Friday, refused to say whether the contract was terminated at Merit's request.

"Contract relationships like this are typically things that we don't publicly discuss," said Laura Van Hoosier, whose company also owns hospitals in Illinois and Texas.

An anesthesiology group from Overlook Hospital in Summit, which is part of Atlantic Health, abruptly took over at Mountainside on Friday.

"I didn't even know their names," said Rao Ballem, a general surgeon at Mountainside, who only got word of the firings Thursday night and performed 10 operations Friday using the services of the new outfit. "I think it's personally a total show of unprofessionalism."

Luz said a contract dispute his group had with Horizon Blue Cross Blue Shield of New Jersey was the "excuse" given for its dismissal. The group severed its relationship with the insurer several months ago over reimbursement issues.

The former president of Mountainside's medical staff, Durgesh Mankikar, one of the fired anesthesiologists, said he also was dismayed at how the situation was handled. He said no one from either Atlantic Health or Merit mentioned any problem with the anesthesiology group.

"I feel this was quite unfair," he said.

Atlantic Health put the money-losing nonprofit hospital on the market in 2005. One of the criteria Atlantic Health officials set for any new owner was that Mountainside be maintained as an acute care hospital.

There were concerns that as a for-profit company, Merit might try to "flip" the hospital for its development value as real estate, said Renee Steinhagen, executive director of New Jersey Appleseed, a public interest law center.

She said a clause put into place by State Health Commissioner Fred Jacobs ensures that Mountainside will have to be maintained as an acute care hospital for 10 years -- a stipulation that would have to be adhered to by any future purchaser.

Richard Harries of North Caldwell, a retired engineer and developer who lost a fight to see control of the hospital returned to the community, said his group, the Friends of Mountainside Hospital, will now be dissolved.

"Right now, we're out of the loop, but I hope to meet with them (Merit) shortly," he said.