Why this major NJ hospital is in trouble with Phil Murphy

It almost read like an indictment with sharp accusations of mismanaging funds and breaking state law.

Gov. Phil Murphy issued an executive order on July 27 announcing that an outside monitor would oversee University Hospital in Newark, delivering a gut punch to the state’s only public hospital, which has hemorrhaged cash for much of its 40-year existence in the city’s central ward.

But as a series of unrelated events unfolded since the spring, the Democratic governor declared “immediate actions are necessary to ensure the facility can continue providing the highest level of care to the community while it gets its fiscal house in order and improves its health care quality.’’

The Murphy administration alleges the hospital had illegally begun phasing out its neonatal and pediatric intensive care units, and transferring the beds to Newark Beth Israel Medical Center, before the state had granted permission to eliminate a key service to the community.

The University earned an F in the Leapfrog Group safety report card — the lowest grade any hospital in the state had received this year.

Fitch Ratings downgraded the hospital’s bond rating by four notches.

Murphy also questioned the hospital’s board of directors vote to give CEO John Kastanis a three-year contract upping his salary from $810,000 to $900,000, “in spite of the fact that University Hospital remains in poor financial condition.”

Health Commissioner Shereef Elnahal selected Judith M. Persichilli, the former CEO of the national hospital chain, Catholic Healthcare East, to assess the hospital’s financial stability and quality as the independent monitor.

Kastanis pledged cooperation with the state and Persichilli.

“In the last several years, University Hospital has taken a variety of steps to address financial challenges while providing access to high-quality care for all patients,” Kastanis said in a statement. “The hospital has made changes to its administrative and clinical leadership, and diligently implemented new programs focused on patient safety and quality of care.”

“We recognize there is much work left to be done,  and look forward to working collaboratively with Ms. Persichilli, as well as our state and local elected officials and regulatory agencies, to accelerate progress at University Hospital,” the statement said.

Here’s a look at the problems that prompted Murphy’s action, and why University Hospital is important to New Jersey: