(Bloomberg) -- A Michigan company that rescued a bankrupt Chicago hospital has stepped in to run operations at CarePoint Health, the long-troubled system across the river from Manhattan. 

Insight, based in Flint, Michigan, is working with current management to financially stabilize CarePoint’s three hospitals. CarePoint operates the 261-bed Bayonne Medical Center, along with Hoboken University Medical Center and Christ Hospital in Jersey City, each with about 350 beds. Insight eventually plans to rebrand them under its banner, said one person familiar with the situation, who declined to be identified because the process isn’t public.

“Throughout these past challenging months, CarePoint Health has remained resolute and focused on its mission of providing excellent patient-centered care to the people of Hudson County, and our collaboration with the Insight team has been extraordinarily helpful,” Dr. Achintya Moulick, CarePoint’s chief executive officer, said in a statement. “Ensuring that our system’s safety net hospitals receive the investment they need to operate sustainably both now and well into the future remains our top priority, and we are exploring various options to meet that goal.” 

Hospitals are still grappling with higher costs for staff and supplies, with even some brand-name facilities struggling to recover. For systems like CarePoint with a preponderance of poorer patients, the challenge is even greater because government reimbursements for treatments are less than from private insurers. For smaller systems, an acquisition or partnership can be a lifeline that provides an ability to negotiate better terms on everything from insurance payments to supply costs. 

Alarming Finances

CarePoint is emblematic of those struggles. The New Jersey Department of Health said it provided the system nearly $8.4 million to help it make payroll and hire a chief restructuring officer since mid-February as the system works to turn around. 

“We’ve been in this situation before and we do have a strong sense of optimism for these hospitals to continue to stay open,” Insight’s Chief Strategy Officer Atif Bawahab, said. “But at the same time, we do have to make changes, and those changes will take some time.” 

Insight bought another safety-net hospital, Mercy Hospital and Medical Center, the oldest in Chicago, out of bankruptcy in 2021 as it was slated for closure. It was an unexpected resolution from a small entity whose specialties include neurosurgery, orthopedics and sports medicine. Since then, it also purchased a shuttered rural Iowa hospital. 

CarePoint’s finances alarmed the state enough that it appointed a monitor in January and sent letters last month to CarePoint’s hospitals ordering them to prepare a disaster plan in the event that they suddenly need to close facilities or stop services. CarePoint said it lost $68 million last year. And a number of vendors have sued the hospitals for non-payment in recent months, according to court filings. 

“The Department’s monitor continues to closely watch CarePoint’s finances and the State is aware that CarePoint has been discussing future relationships with Insight,” said New Jersey Department of Health spokesperson Dalya Ewais in an emailed statement. 

The system has struggled for years. In 2019, its Jersey City and Hoboken hospitals were set to be acquired by RWJ Barnabas Health, New Jersey’s largest hospital system, but the deal never materialized. 

--With assistance from Reshmi Basu.

(Updates story with CarePoint’s full-year losses in eighth paragraph and state comment in ninth paragraph.)

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