Hospital Board Members with "the Juice" in New Jersey

We recently commented on the conviction of a state legislator charged with selling his influence to a powerful local medical center. NorthJersey.com has a follow-up on this story which shows how health care leaders are often members of the power elite, if not quite of the superclass, and how their machinations put this group's interests ahead of the mission of their health care organizations.


The General Overview

The trial of former state Sen. Joseph Coniglio, convicted in a bribery scandal involving Hackensack University Medical Center [affiliated with UDMNJ, which has had its own issues, e.g., here], exposed the hospital’s reach into the State House — and put a spotlight on the wealthy, influential men who serve as the hospital’s power brokers.

Hackensack’s board members have connections and political muscle that extend far beyond the hospital. At black-tie fund-raisers and dinners at board member Joseph Sanzari’s Stony Hill Inn, business — hospital and otherwise — is on the agenda.

Various board members help to underwrite Bergen County’s Democratic machine and powerful lawmakers in Trenton. They’re awarded many of the region’s public construction contracts. They have the network — and the money — to smooth over zoning issues for the hospital. Testimony at the trial this month showed they supported the hiring of Coniglio, who was convicted of steering millions in grants to Hackensack while on the hospital’s payroll.

'A political machine' is how Assistant U.S. Attorney Thomas R. Calcagni described the hospital as he told jurors about Hackensack’s relationships with former acting governor and Senate President Richard Codey, state Sen. Paul Sarlo, Coniglio and others during the trial.

Board Members' Self-Dealing

There are several results. One is that "some [board members] are also making money off the hospital." The article gave several examples of such conflicts of interest.

A few examples from the hospital’s federal tax filings for 2007, the latest available:

* Companies owned by Sanzari and Creamer are building a 975-car garage as part of the $135 million cancer center now under construction. Creamer was paid more than $475,000 by the hospital for construction services.

* The hospital paid more than $2 million to Progenitor Cell Therapy, a private stem cell research company owned in part by Ferguson; Dr. Andrew Pecora, director of the cancer center; board members Peter C. Gerhard, George T. Croonquist and Samuel Toscano Jr.; and the hospital’s chief operating officer, Robert C. Garrett.

* The hospital paid $2.5 million to lease space from Sanzari 2001, where board member David Sanzari — Joseph’s cousin — is a managing member with an ownership stake. It also spent $68,000 at the Marriott at Glenpointe hotel, which is owned by David Sanzari’s family.

* The DeCotiis law firm, one of the most influential in the state, made more than $1 million from the hospital. It is representing the hospital in the Coniglio case and guiding its campaign to reopen Pascack Valley Hospital in Westwood. During that time, Frank Huttle III, a partner, served on the board. He said Friday that he resigned recently.

* Universal Health, which operates a retail pharmacy at the hospital, received $200,000. At the time, Toscano was the company’s chief executive officer.

Political Influence Disadvantages the Competition

The membership of the hospital's leaders in the power elite could be used to advance the hospital against less-connected competitors.

The Coniglio trial served as a primer on the backroom politics of New Jersey, where certain grants, known as 'Christmas tree items,' were doled out based on who has 'the juice.' By all accounts, Hackensack mastered the game and loomed large in Trenton. From 2004 to 2006, the hospital received $17.4 million for its cancer center, an extra $9 million in charity care above the millions it was already getting and $250,000 for the Joseph M. Sanzari Children’s Hospital. A $900,000 research grant was awarded to the private stem cell firm at the hospital and $70,000 went for a seat belt study.

Those awards dwarf the grants given to Hackensack’s competitors.

Connectedness of the Hospital's Board Members

The article gave further examples of how connected were the board members, and how they used their connections.

At Hackensack, a few names — Simunovich, Ferguson, Sanzari, Creamer — keep showing up in influential roles on key boards. They serve as trustees of the Hackensack University Medical Center Foundation, the hospital’s fund-raising arm, as well as the hospital’s board of governors and Hillcrest Health Service System, the hospital’s parent corporation. Leading contractors and developers — Sanzari, Creamer and John C. Fowler — are on the building committee.

Simunovich is the former chairman of the board of governors and current chairman of the board of trustees for the Hackensack University Medical Center Foundation, the hospital’s fund-raising arm.

Governor Corzine did not reappoint Simunovich to the Turnpike Authority in 2007 after he was investigated by the State Ethics Commission; as chairman, he had voted on millions in public contracts that were awarded to Sanzari while he accepted free rides on the contractor’s private jet. Simunovich paid a $50,000 fine, which was not an admission of guilt.

'Mr. Simunovich’s actions do not reflect the standards demanded by the governor for those who serve in his administration,' Corzine’s then-spokesman Anthony Coley said.

Joseph Sanzari serves as first vice chairman, the No. 2 position on the hospital’s board of governors.

Sanzari is part owner of both the Stony Hill Inn in Hackensack and the New Bridge Inn in New Milford, popular hangouts for Bergen County’s political elite. Sanzari, his companies and employees have contributed more than $100,000 to political campaigns and political action committees in the past three years, according to data the company provided to state elections regulators.

Among his top employees is state Sen. Paul Sarlo, also the mayor of Wood-Ridge. Sarlo oversees billions in public spending as a lead member of the Senate Budget and Appropriations Committee. As chairman of the Senate Judiciary Committee, he also controls key appointments to state agencies that have awarded millions in contracts to Sanzari’s firms.

Sarlo, chief operating officer for Sanzari’s construction company, testified at the trial that he was largely responsible for getting the $900,000 grant for the hospital’s cancer center. He said he also lobbied Codey for the $9 million cancer center grant and played a role in the $900,000 grant for stem cell research at the hospital.

Conclusions

Hospitals often have sterling reputations within their communities as selfless organizations devoted to improving the health of the people. As we have noted, hospitals and other health care organizations have come to be run more often by people with managerial background than those with health care experience. Not-for-profit hospitals have boards of trustees who are supposed to exercise stewardship, making sure the organization upholds its mission. But as we have noted before, e.g., here, boards of health care and related organizations may put their own agendas ahead of the mission. Furthermore, boards of big hospitals and other health care organizations seem to be increasingly composed of the well-connected, often to the point that they can be regarded as members of the power elite, if not the superclass. There may be some short term benefits to having such people on the boards. In the long run, however, is it any surprise that their missions may give way to other interests?

Hat tip to University Diaries.

ADDENDUM (4 May, 2009) - Hackensack University Medical Center's response to the news story discussed above was apparently first to stop advertising in the offending newspaper, and ban its sales in the hospital. Another example, almost laughable, of a health care organization's leadership trying to shoot the messenger, and of how the anechoic effect may be generated. Hat tip to the Schwitzer Health News Blog.