For-profit firms bid to acquire St. Mary's
Nov 16, 2012 (The Record (Hackensack - McClatchy-Tribune Information Services via COMTEX) --
Two for-profit health-care companies -- one a 20-hospital national chain and the other the owner of three Hudson County hospitals -- are in talks to buy St. Mary's Hospital in Passaic. Its board is expected to choose one by the end of the year, the hospital said Thursday.
Prime Healthcare Services, which withdrew a bid to buy Jersey's City's Christ Hospital earlier this year amid intense community and union opposition, has made an offer. The California-based company, with $2.5 billion in annual revenue, would commit to keeping St. Mary's open for five years as a full-service hospital and would invest "tens of millions of dollars" in its physical plant over the next few years, an adviser to the company said.
The other offer is from Passaic Hospital Holdco, owned by a group of investors that also owns hospitals in Bayonne and Hoboken and acquired Christ Hospital at bankruptcy after Prime's withdrawal. When the group first acquired Bayonne Medical Center, it withdrew from various managed-care networks in order to bill at higher, out-of-network rates, but it has since joined one of the state's largest insurance networks.
Details of the bids were not released.
"A subcommittee of the board will evaluate the offers and make a recommendation to the full board before the end of the year," said Vanessa Warner, a spokeswoman for St. Mary's. The two bidders have an "interest in purchasing the hospital and continuing its mission," she said.
Any proposed sale to a for-profit company must be approved by the state attorney general as well as the state Department of Health.
JNESO, the union representing some 500 nurses and technologists at the hospital, endorsed Passaic Hospital Holdco's proposal after meeting with both bidders, said its president, Virginia Treacy. The union represents nurses at another Holdco facility, Hoboken University Medical Center.
"We're pretty comfortable with them," Treacy said. "We've had dealings with those people at Hoboken and have a certain sense of continuity regarding the terms and conditions" of the union contract. She has had no prior experience with Prime Healthcare, she said.
The need for a decision at St Mary's is urgent, said Treacy, noting there have been several layoffs at the facility this year. "We're really eager for the board to make their choice and move forward. They [the hospital] need money."
St. Mary's, the last surviving hospital in a city of 70,000 that once had three, is in financial straits and had less than a week's cash on hand earlier this year.
The hospital, like St. Joseph's Healthcare System's hospitals in Paterson and Wayne, is sponsored by the Sisters of Charity of Saint Elizabeth.
Its hopes for a rescue were dashed in August when a planned sale to Ascension Health Care Network, a new for-profit Catholic health care company, fell through. Although the St. Mary's board had approved the sale, it was contingent upon Ascension's acquisition of St. Joseph's two hospitals, and the St. Joseph's board rejected the plan. That led to a flurry of talks with other prospective buyers.
The state guarantees most of St. Mary's $39 million in debt and has provided more than $40 million in subsidies over the last three years. The hospital emerged from bankruptcy in 2010.
It reported nearly 27,000 emergency room visits and 10,000 in-patient admissions last year. It employs about 1,400 people, and has a payroll of more than $67 million.
Prime has experience turning around many distressed hospitals, said Joshua Nemzoff of Nemzoff & Co., which is advising Prime on the negotiations. "They are extremely well-capitalized," he said, noting that Prime also is pursuing talks with four other New Jersey hospitals.
The Passaic Hospital Holdco investors also own the 150-bed Bayonne Medical Center, the 364-bed Hoboken University Medical Center and the 381-bed Christ Hospital in Jersey City, as well as CarePoint Health Plans, a Medicare managed-care plan in New Jersey.
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