Newark's St. Michael's Hospital: Bankruptcy Court Approves Sale

The sale of Saint Michael’s Medical Center in Newark took a major step forward on Thursday when the U.S. Bankruptcy Court (NJ) approved Prime Healthcare’s offer to purchase the struggling hospital.

The sale has reportedly been in the works since 2013, but has been caught up in the approval process with the state.

Next steps for the pending sale include obtaining the required regulatory approvals as well as the required documentation for completing the sale and a final sale order from the bankruptcy court, according to a joint statement from St. Michael’s and Prime Healthcare.

St. Michael’s declared bankruptcy in August, filing a WARN notice that stated the jobs of around 1,400 employees may be in jeopardy.

Since then, several community groups and labor unions have expressed public support for speedy state approval of the hospital to Prime Healthcare, which operates 38 acute care hospitals in 11 states.

• See related article: Newark Union Members: Save Saint Michael’s Medical Center

In March, the Newark City Council passed a resolution urging the state to give an expeditious approval to the deal.

Central Ward Councilwoman Gayle Chaneyfield Jenkins, said she and her council colleagues will continue to keep the pressure on the state to approve the sale.

“I am calling on the state agencies to expedite their approvals of this sale,” said Chaneyfield Jenkins. “We have waited long enough – too long, in fact – for this the state to approve the sale to Prime.”

“Now that the bankruptcy judge has signed off on the sale, it’s time for the state to stop playing games and approve the sale now,” agreed the Rev. Ronald Slaughter, the Senior Pastor of Saint James AME Church and a co-chair of The Save Saint Michael’s Medical Center Coalition. “There is no more justification for the state to continue to delay the sale of this hospital.”

In addition to investing at least $50 million in capital improvements over the next five years, the health care provider has pledged to “substantially hire” the current staff, maintain levels of charity care and keep the hospital’s existing health care contracts, according to the hospitals’ joint statement.

“Prime Healthcare looks forward to expanding its presence in New Jersey and partnering with the dedicated physicians, nurses and employees,” said Prem Reddy, chairman, president and CEO of Prime Healthcare Services. “[We] are moved by the overwhelming support from the community, elected officials and Saint Michael’s staff.”

• See related article: Saint Michael’s Ranked Among State’s Best Hospitals

TAX FREE, NO MORE?

According to a statement from Newark Mayor Ras Baraka, the purchase would allow the city of Newark to collect revenue from the formerly tax-exempt hospital.

Chaneyfield Jenkins recently called for her colleagues to review the tax-free status of another Newark hospital, Beth Israel Medical Center.

Baraka played down the idea in a statement on Monday.

“For weeks, my administration has been meeting with mayors across New Jersey to discuss the financial difficulties confronting nonprofit hospitals throughout the state,” Baraka wrote. “We have also been in contact with Beth Israel Medical Center to chart a path forward ensuring that the residents of Newark can continue to enjoy the quality, affordable, and accessible health care that they have long received from Beth Israel over the years. Prime Healthcare Services’ recent purchase of St. Michael’s Medical Center now allows us to collect taxes. We understand that this is a difficult situation given the hundreds of millions of dollars in debt the former non-profit hospital as transferred to the state and taxpayers.

“Central Ward Councilwoman Gayle Chaneyfield Jenkins’s recent call for the creation of a task force to review the tax-exempt status of Beth Israel is premature and unnecessary. We have been exploring many opportunities to chart a path forward including revenue generation and will present these solutions at an upcoming meeting with Beth Israel. The Township of Morristown’s recent victory in state tax court and Barnabas Health CEO and President Barry Ostrowsky’s statements to NJBIZ gives us hope that our discussions will be fruitful and positive.

“My administration appreciates the councilwoman’s passion and zeal on this issue. As we move forward, we welcome her recommendations to protect our residents and ensure that our city receives its fair share of taxes.”

File photo: Newark union members rally in support of St. Michael’s Medical Center.