Valley expansion plan under fire
Saturday, March 22, 2008
Last Updated Saturday March 22, 2008, EDT 9:48 AMBY BOB GROVESThe cost of Valley Hospital’s proposed expansion would threaten Ridgewood’s taxpayers and the future of the facility, critics charged.
Valley’s $750 million plan to replace two of its older buildings with three new ones over the next decade could balloon, with interest, to $1 billion — and that would require the hospital to earn an additional $40 million a year for 25 years to pay it off, said Paul Gould. He is a member and spokesman of Concerned Residents of Ridgewood, a neighborhood group that has opposed Valley’s expansion plans for months.
“Where will it come from?” Gould said. “Will we end up with another Pascack Valley?” The Westwood hospital went bankrupt and closed last year after building a $50 million addition.
On the contrary, Valley’s plan “is vital to its success,” said Maureen Curran Kleinman, a hospital spokeswoman.
“If Valley is not allowed to renew over time, we will not be the hospital that the community will choose for its medical care in the future,” Kleinman said in a statement. “It will impede our ability to attract the best physicians and staff, and the hospital would be at risk of facing the same unfortunate fate as Pascack Valley and many other New Jersey hospitals that have been forced to close their doors.”
The Ridgewood Planning Board is deciding whether to approve separate requests, by Valley and by Concerned Residents, for changes in the village’s hospital zone ordinances and master plan. Those changes would either allow the hospital to expand or preserve the surrounding neighborhood.
Beyond financial concerns about the hospital’s plan, Gould and other members of his group worry how much Valley’s expansion would cost the village.
“Taxpayers would absorb the additional infrastructure costs of roads, fire and police, which are paid for by the residents of Ridgewood,” he said.
If, for example, Valley increased its occupancy rate from its current 87 percent to 100 percent, to help pay for the expansion, that could add 80,000 car trips on village streets to the hospital per year, on top of 600,000 vehicle visits already made there annually, Gould said.
While other area hospitals have expanded or renovated in recent years, Valley’s $750 million plan is one of the most ambitious.
Gould’s group is worried that Valley will suffer the same fate as Pascack Valley, which succumbed to a $100 million annual debt after it opened an addition. The hospital closed in November.
“We do not want another bankrupt hospital,” Gould told the Planning Board during a public hearing this week.
But Valley officials say the hospital is not in financial danger.
Valley would finance the first phase of its expansion, estimated at $420 million, through tax-exempt bonds, fund-raising and existing cash, “as is typical financing for not-for-profit hospital projects,” Kleinman said.
Even after the project is complete, Valley’s debt will be “manageable and moderate in comparison to other hospitals,” Kleinman said.
Gould conceded that Valley “is very profitable today,” he said. At a time when many of the state’s hospitals are struggling financially, Valley hospital has $225 million in cash and investments and a $46 million debt, according to tax filings. Revenue increases by 8 percent each year, Gould said.
But to pay for the hospital to pay for the expansion, Gould said, net patient revenue would have to increase by an additional 8 percent a year. How will the hospital do that when it’s only adding three more beds to its current 451? he asked.
Valley officials have repeatedly said their building plan is being done to bring the hospital up to modern medical standards, not to bring in more patients. Will the hospital have to increase what it charges patients? the neighborhood group asked.
“Valley’s charges are among the absolute lowest of any hospital in the state,” Kleinman said. “Even after the project is in place we will still have charges well below other hospitals in New Jersey.”
The neighborhood group also claims that the Planning Board, through its attorney and other professional advisers, has already been negotiating with Valley officials about some terms of the expansion before it has been approved.
David Nicholson, chairman of the Planning Board, said its professionals had met with Valley officials, but denied that they had “negotiated” any of the proposal.
“The implication that this matter is already decided is simply not true,” Nicholson said.
Kleinman said the hospital met with village professionals to discuss the hospital ordinance and make a recommendation to the Planning Board, but not to negotiate terms of the proposed expansion.