Two N.J. hos­pi­tals at op­po­site ends of bank­ruptcy path

Modern Healthcare - - REGIONAL NEWS - —Me­lanie Evans

St. Michael’s Med­i­cal Cen­ter in Newark, N.J., has backed a bid from Prime Health­care Ser­vices to be bought out of bank­ruptcy from its cur­rent owner, Trin­ity Health.

The 147-bed hos­pi­tal’s board of direc­tors said they fa­vored the $62.2 mil­lion bid from Prime, a for­profit hos­pi­tal op­er­a­tor based in On­tario, Calif., over a com­pet­ing bid from Los An­ge­les-based Prospect Med­i­cal Hold­ings.

Separately, a hos­pi­tal in East Or­ange, N.J., that is poised to be ac­quired by Prospect an­nounced it has filed for bank­ruptcy pro­tec­tion.

A bank­ruptcy judge ap­proved the St. Michael’s deal, which in­cludes $50 mil­lion for cap­i­tal in­vest­ment and a pledge to main­tain hos­pi­tal ser­vices. The med­i­cal cen­ter needs ap­proval from state of­fi­cials in a mar­ket with grow­ing ex­cess ca­pac­ity and sig­nif­i­cant du­pli­ca­tion of ser­vices, ac­cord­ing to a March New Jer­sey Health Care Fa­cil­i­ties Fi­nanc­ing Author­ity re­port.

Prime has agreed to op­er­ate St. Michael’s un­der the Eth­i­cal and Re­li­gious Di­rec­tives from the U.S. Con­fer­ence of Catholic Bish­ops and pro­vide sim­i­lar amounts of char­ity care with the same el­i­gi­bil­ity rules.

Mean­while, East Or­ange Gen­eral Hos­pi­tal filed for Chap­ter 11 bank­ruptcy last week, cit­ing its de­te­ri­o­rat­ing fi­nan­cial po­si­tion. Prospect Med­i­cal Hold­ings pre­vi­ously won the nec­es­sary ap­provals to ac­quire the strug­gling hos­pi­tal.

To close the deal, the hos­pi­tal is seek­ing bank­ruptcy to “rene­go­ti­ate some con­tracts and emerge stronger,” said Martin Bieber, East Or­ange’s in­terim CEO. “The or­ga­ni­za­tion’s liq­uid re­sources have been de­pleted to a point that it is un­able to com­plete the trans­ac­tion with­out hav­ing the abil­ity to fi­nan­cially re­struc­ture its oper­a­tions,” he said.

St. Michael’s Med­i­cal Cen­ter, Newark

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