St. Michael's Medical Center in Newark, N.J., has backed a bid from Prime Healthcare Services to be bought out of bankruptcy from its current owner, Trinity Health.
The 147-bed hospital's board of directors said they favored the $62.2 million bid from Prime, a for-profit hospital operator based in Ontario, Calif., over a competing bid from Los Angeles-based Prospect Medical Holdings.
Separately, a hospital in East Orange, N.J., that is poised to be acquired by Prospect announced it has filed for bankruptcy protection.
A bankruptcy judge approved the St. Michael's deal, which includes $50 million for capital investment and a pledge to maintain hospital services. The medical center needs approval from state officials in a market with growing excess capacity and significant duplication of services, according to a March New Jersey Health Care Facilities Financing Authority report.
Prime has agreed to operate St. Michael's under the Ethical and Religious Directives from the U.S. Conference of Catholic Bishops and provide similar amounts of charity care with the same eligibility rules.
Meanwhile, East Orange General Hospital filed for Chapter 11 bankruptcy last week, citing its deteriorating financial position. Prospect Medical Holdings previously won the necessary approvals to acquire the struggling hospital.
To close the deal, the hospital is seeking bankruptcy to “renegotiate some contracts and emerge stronger,” said Martin Bieber, East Orange's interim CEO. “The organization's liquid resources have been depleted to a point that it is unable to complete the transaction without having the ability to financially restructure its operations,” he said.
