In a first step toward the creation of a Newark, N.J.-area healthcare network, the University of Medicine and Dentistry of New Jersey in Newark announced last week that it will acquire Hospital Center at Orange (N.J.).
"This is the first asset merger we've done," said Frederick J. Hammond Jr., the university's senior vice president for administration and finance.
No money will change hands in the transaction, but the university plans to assume all the assets and liabilities of Hospital Center, Hammond said.
The 322-bed community hospital posted losses on patient-care operations of $10 million in 1994 and $6.6 million in 1995 but had net income of $6.5 million in 1995 partly because of a one-time adjustment, a spokesman said. For the four-month period ended April 30, 1996, the hospital posted net income of $2.6 million on a $66 million operating budget, he added.
Hospital Center will operate as a subsidiary of UMDNJ-University Hospital and will be governed by the university's board of trustees. Both hospitals are in Essex County.
UMDNJ, a state-supported health science center, plans to combine the medical staffs of Hospital Center and UMDNJ-University Hospital, its primary teaching hospital. UMDNJ President Stanley S. Berger Jr., M.D., said the acquisition lays the groundwork for building a strong network of community-based physicians and making the university hospital more competitive for managed-care contracts.
Hammond said Hospital Center will remain an acute-care hospital, and "in all likelihood" some reductions in staff may be made over time, probably achieved through attrition.
As part of the university's strategic plan, officials are having discussions with other nonacute-care providers in the area, which could result in other acquisitions, Hammond said.