UNION COUNTY, NJ - The sale of Runnells Specialized Hospital was finalized, according to a press release issued by Union County on Monday. The sale will generate an estimated $500,000 in new property taxes for Berkeley Heights in this $26 million cash transaction. 

The sale of Runnells to Center Management Group in Flushing, NY will save Union County as much as $52 million over the next five years. 

As part of the transaction, the county leased back the hospital’s 44-bed Cornerstone Psychiatric Unit from an affiliate of Center Management for a period up to 10 years.

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The sale of Runnells Specialized Hospital marks the first ownership change in the 102-year history of the hospital. The hospital remains open and will remain open under new ownership. Of the 391 employees impacted by the move, approximately 209 have either been rehired, kept their jobs or been transferred to other positions within the county; and 63 have retired. Center Management is expected to continue to rehire more out of this employee pool in the days ahead.

According to the press release, the County had mandated a number of conditions be met for the completion of sale, requiring that Center Management:

  • pay not less than the appraised value of $26 million to the County;
  • give current Hospital patients the right to remain at the Hospital;
  • protect the Hospital employees, in good standing, by offering the right of first refusal and providing as many employment opportunities as possible at the Hospital and at Center Management Group's other locations;
  • guarantee a five-year capital improvement plan;
  • commit to sharing revenue with the County for any new health care related services or facilities Center Management Group adds to the Hospital;
  • agree to a deed restriction that will require the Hospital remain a health care facility for long-term patients;
  • and agree that a certain percentage of beds at the Hospital shall remain available for Union County residents and to indigent patients.

.“This was a comprehensive effort that analyzed every facet of the hospital and every scenario for its continued operations,” said Freeholder Chairman Christopher Hudak, adding the decision “of this magnitude” was “not an easy one and required well over two years of work.”

“The bottom line is that we’ve made the best decision possible toward maintaining the financial viability of the hospital, keeping it open and guaranteeing the continuum of quality care for its patients,” Hudak said.

Since 2006, New Jersey's Medicaid Program and the Federal government have been underfunding  long-term care facilities, and Medicare/Medicaid rates have been reduced each year, making it difficult for any county to operate a nursing home facility according to the press release issued by the County.

As a result, the County has paid a total of more than $30 million over the past two years to subsidize the facility. In 2013, the total subsidy amounted to $13.5 million.

Because Counties have in part experienced decreasing reimbursements, several counties in recent years have sold their nursing homes to private operators:

These Counties include: Burlington (2012), Camden (2013), Cumberland (2011), Essex (1996), Hudson (2002), Mercer (2010). Salem County is currently considering a sale.

Related article on background and process of the sale