NEWARK, NJ -- The acquisition of Saint Michael’s Medical Center in
Newark by Prime Healthcare Services is in the best interest of the public,
the president and CEO of the hospital testified today before a panel of
state officials reviewing the sale.
President and CEO David Ricci said the sale to Prime was the only alternative
to carrying out the mission of the financially struggling nonprofit hospital.
“When we sought a strategic partner in January 2012, the medical
center was struggling to meet the financial challenges of a rapidly changing
healthcare landscape,” Ricci testified. “The Board took a
bold, yet necessary step to seek a strategic partner to ensure Saint Michael’s
would continue to serve the community as an acute-care hospital.”
Ricci was among more than a dozen people including elected officials, union
representatives and community members who testified during a public hearing
at New Jersey Institute of Technology. The hearing is required by the
state’s Community Health Care Assets Protection Act, or CHAPA.
The panel consisted of Deputy Attorneys General Jay Ganzman and Jonathan
Peitz on behalf of Acting State Attorney General John Jay Hoffman, and
Health Systems Specialist Scott Owens, on behalf of Acting State Health
Commissioner Cathleen D. Bennett.
Under CHAPA, the Attorney General must review Prime’s application
to acquire the hospital. In addition, Commissioner Bennett must review
and approve Prime’s Certificate of Need application to purchase
Prime entered into an agreement to purchase Saint Michael’s in February
2013 and applications were jointly submitted to the Attorney General and
the state Health Department at the time.
After an exhaustive review process that included 198 requests for data
and completeness questions, the Attorney General deemed the CHAPA application
complete on Dec. 7.The state Health Department, after a similarly lengthy
review process, deemed the Certificate of Need application complete on Nov. 30.
As part of its review, the Attorney General must determine whether Saint
Michael’s received a full and fair market value for its assets.
Ricci noted that after Saint Michael’s was forced to seek reorganization
in U.S. Bankruptcy Court, the hospital was put out to bid a second time,
attracting two bidders, Prime and Prospect Medical Holdings. The auction
lasted seven hours with 16 rounds of bidding.
“Saint Michael's ran not one, but two robust solicitation processes,”
Ricci said. “The robust and very public bidding process ensured
that Saint Michael’s received a fair market value.”
On Nov. 9, both Prime and Prospect made presentations to Saint Michael’s
Board of Directors, who had the opportunity to ask questions to representatives
from both parties.
“Upon conclusion of the presentations, the Board, together with senior
management and the legal and financial advisors met again and continued
the review process,” said Ray Ocasio, the Chair of the Saint Michael’s
Medical Center Board. “There was an open, frank and lengthy discussion
among the Board members. Upon conclusion of this review process, which
in total lasted over eight hours and included consultation with the Creditors
Committee, the Board decided that Prime was the successful bidder.”
Ocasio, who also serves as executive director of La Casa De Don Pedro in
Newark, said there were several crucial factors that led the Board to
pick Prime, including, “Prime’s decision to increase it’s
initial offer by $13 million to $62 million and double its investment
in the hospital over five years to $50 million as well as Prime’s
track record of never closing hospital that it had acquired.”
Newark Central Ward Councilwoman Gayle Chaneyfield Jenkins called the $50
million investment a “game changer” for Newark.
“This investment ensures that Saint Michael’s will become a
state-of-the art medical facility not only for today, but well into the
future,” Chaneyfield Jenkins said. “This investment will improve
the quality of healthcare for the residents of the Greater Newark community.
It also ensures Prime’s commitment to Saint Michael’s and
the Newark community for the long haul.”
Chaneyfield Jenkins said the Newark City Council unanimously approved the
sale to Prime because of the company’s commitment to Newark. She
noted that Prime has agreed to continue to operate Saint Michael’s
within the Ethical and Religious Directives of the Catholic Church.
The directives mandates that Saint Michael’s provide adequate healthcare
for people whose social condition puts them at the margins of our society
and makes them particularly vulnerable to discrimination: the poor; the
uninsured and the underinsured; children and the unborn; single parents;
the elderly; those with incurable diseases and chemical dependencies;
racial minorities; immigrants and refugees.
“Even though Prime is not a Catholic institution, they have agreed
to uphold the Ethical and Religious Directives,” Chaneyfield Jenkins
said. “That goes a long way to demonstrate their commitment to serving
Bishop Jethro James, speaking on behalf of a grass-roots community based
coalition that formed to save the hospital, said the coalition supported
the sale of Saint Michael’s to Prime. James noted that the coalition
collected more than 50,000 signatures to urge Gov. Christie to approve the sale.
“Our coalition supports the sale of Saint Michael’s to Prime
Healthcare Services because we believe it is in the best interest of the
public,” James said. “We have met with the senior management
of both Saint Michael’s and Prime and we believe that a conversion
from nonprofit to for profit was the only alternative to ensure Saint
Michael’s remains open as an acute-care hospital.”
The Attorney General has until March 6, 2016 (90 days from the date the
CHAPA application was certified complete) to make a recommendation on
the sale. The state Health Planning Board has until Feb. 28, 2016 (90
days from the date the Certificate of Need application was deemed complete)
to make a recommendation to Commissioner Bennett. The next meeting of
the state Health Planning Board is scheduled for Feb. 4. Commissioner
Bennett has 120 days to act upon the recommendations of the state Health
“Prime Healthcare has remained committed to saving Saint Michael's
Medical Center for the past three years, and has reiterated that commitment
by increasing our purchasing price and doubling our capital improvement
budget,” said Troy Schell, General Counsel for Prime Healthcare.
“We respectfully urge the Attorney General to recognize that commitment,
as well as the wishes of the greater Newark community, by moving this
process forward and approving the sale."
Once Attorney General Hoffman and Health Commissioner Bennett make their
recommendations, Saint Michael’s will file with the state Superior
Court for final approval.
About Saint Michael’s Medical Center
Established by the Franciscan Sisters of the Poor in 1867, Saint Michael’s
is a 357-bed regional tertiary-care, teaching, and research center in
the heart of Newark’s business and educational district. Saint Michael’s
Medical Center is a member of Trinity Health. Learn more at
About Prime Healthcare Services
Prime Healthcare Services is an award-winning national hospital system
with 38 acute-care hospitals providing nearly 40,000 jobs in 11 states.
Seven of the hospitals are members of the Prime Healthcare Foundation,
a 501(c)3 public charity. Based in California and one of the largest hospital
systems in the country, Prime Healthcare is committed to ensuring access
to quality healthcare. It has been recognized as among the "100 Top
Hospitals" in the nation 33 times and among the "15 Top Health
Systems" three times, and is the only "10 Top Health System"
west of the Mississippi. Our hospitals have been recognized by The Joint
Commission among the "Top Performers on Key Quality Measures"
in 2014. For more information, please visitwww.primehealthcare.com.