The acting Health Commissioner has 120 days to make a decision on the sale of St. Michael's Medical Center.
TRENTON -- The Christie administration should allow a for-profit hospital chain to buy the bankrupt St. Michael's Medical Center in Newark, a state panel recommended Thursday.
The decision by the State Health Planning Board is the first positive sign the deal may go through since Prime Healthcare Services first announced its intentions to acquire the troubled hospital.
A state-funded consultant's report last year recommended closing St. Michael's because there are too many hospital beds in the Newark area, and re-open it as an outpatient center. That report galvanized community support from religious, community and elected officials to support the sale in order to protect the jobs and medical services for the low-income community.
Prime has agreed to pay $62 million to reduce some of the hospital's debt and invest $50 million to modernize the 149-year-old hospital. Prime has committed to keeping the facility operating as a hospital for a minimum of five years. and keep "substantially all" 1,400 employees.
Acting Health Commissioner Cathleen D. Bennett has 120 days to decide whether the deal should proceed. The Attorney General and a judge must also approve the acquisition.
"We still have several steps ahead of us before the sale to Prime is completed but are encouraged by this latest development and hope that Commissioner Bennett will render her decision quickly," said Saint Michael's President and CEO David Ricci
N.J. bankruptcy judge approves $62M St. Michael's Hospital sale
Without Prime in the picture, St. Michael's is at risk of closing or at least shedding many of its health services, according to a report from the health department analyzing the sale and used by the planning board to make its decision. (The planning board reviews and makes recommendations to the commissioner on the sale or expansion of health care facilities and services.)
The hospital maintained 147 beds beds in 2015, down from 297 when Catholic Health East acquired it in 2008.
Health officials noted in their report that Prime intends to introduce new technology, and share services and expenses with other hospitals it owns in the state -- St. Mary's in Passaic and St. Clare's in Dover and Denville.
State health officials recommended a series of requirements the commissioner should enforce if the sale is approved. They include providing a yearly plan explaining how Prime will recruit new doctors, adding new services needed in the city and new insurance contracts to expand patient access, and reducing emergency room wait times.
Prime will also be required to form a community advisory group within 90 days that will hold community meetings, and post all of its financial statements on its website.
The deal also requires Prime to "not implement any out-of-network cost sharing plans if the Department of Banking and Insurance objects," according to the report. For-profit hospital companies have been criticized for relying on a business model that rejects in-network insurance plans in pursuit of higher reimbursement outside the network.
Luis Leon, president of Prime's operations, thanked the board for its support. "Prime Healthcare is committed to preserving and expanding high quality healthcare resources, particularly in underserved communities," he said.