Two national for-profit hospital chains made "very attractive and outstanding offers" to buy Saint Michael's Medical Center in Newark from bankruptcy, according to a statement released to the hospital's workforce on Friday.
TRENTON -- Two national for-profit hospital chains made "very attractive and outstanding offers" to buy Saint Michael's Medical Center in Newark from bankruptcy, according to a statement released to the hospital's workforce on Friday.
Prime Healthcare Services and Prospect Medical Holdings, both large chains from California that include New Jersey hospitals, will each make their pitch to St. Michael's board of directors on Monday, according to the statement from CEO Dave Ricci and attorney Michael Sirota. The winner will proceed to bankruptcy court scheduled for Thursday.
Barnabas Health, the state's largest hospital chain, and the New Jersey Health Care Facilities Financing Authority, the government agency that holds $227 million in hospital debt, did not submit bids. They both had requested the hospital's financial information -- a step that suggested their potential interest -- but declined to bid, Saint Michael's Medical Center spokeswoman Cathy Toscano confirmed Friday.
RELATED: St. Michael's Medical Center files for bankruptcy protection
Prime has been trying to secure state permission to buy St. Michael's for nearly three years but the state Attorney General and the Department of Health have repeatedly declared the application incomplete. Frustrated by the delay and running out of cash, Saint Michael's filed for bankruptcy in August to expedite the sale.
Prospect, a newcomer in the competition for Saint Michael's is in the final stages of acquiring East Orange Medical Center.
"Yesterday, the auction was conducted. This is a critical part of the process since it is the gateway to gain approval of the state for the sale of Saint Michael's," according to the statement from Sirota and Ricci.
"Over the course of the auction both bidders remained very active. This serves as testament to the great interest both parties have in acquiring Saint Michael's and validates that Saint Michael's is essential to the Greater Newark community," according to the statement.
Barnabas, which operates two hospitals in Essex County, has previously expressed interest in buying Saint Michael's, but to close it. A healthcare consultant that studied what it described as a crowded hospital market in Newark recommended the hospital be closed and turned into an outpatient treatment center -- a proposal vigorously fought by Newark elected officials and religious leaders.
"Saint Michael's...worked tirelessly to encourage the bidders to put forward not only the best monetary offers, but also to improve the terms of the asset purchase agreement towards assuring the long-term viability of Saint Michael's. At the conclusion of the auction, Saint Michael's was in possession of two very attractive and outstanding offers," according to the statement.
"The decision rests with the Board of Directors which has the fiduciary obligation to do what is in the best interest of all stakeholders," the statement said. "The Board will have the opportunity to ask questions and gain more understanding of the bidders' interests and intent. The Board will then deliberate and, after consulting with the Creditor's Committee (per bankruptcy protocol), will select who they deem to be the best partner for Saint Michael's to continue to serve the Greater Newark community."
Prime owns St. Mary's Hospital in Passaic and Saint Clare's Hospitals in Boonton, Denville and Dover.
City civic and religious leaders urged the hospital's board of directors to accept Prime's bid, citing its loyalty to the hospital and its history of acquiring and reviving struggling hospitals.
"We urge the board to do the right thing and pick Prime," the Rev. Ronald Slaughter, the senior pastor of Saint James AME Church, said in a statement. "Prime has demonstrated its commitment to our community for the last three years and has stuck with this process even though the state has unnecessarily dragged its feet."
Prospect Medical Holdings is owned by Leonard Green & Associates, one of the largest private equity firms in the nation. On Friday, The Wall Street Journal reported the firm intends to put Prospect on the market.
Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.
