St. Michael’s Medical Center in Newark and Prime Healthcare entered into a nonbinding letter of intent in early December. St. Michael's, currently part of Catholic Health East, is the third hospital Prime has targeted, after St. Mary's and a failed attempt last year to purchase Christ Hospital in Jersey City.
It was previously reported in Grapevine that St. Michael’s was interested in leaving the Catholic Health East system, as well as Prime’s interest in other New Jersey hospitals.
Prime Healthcare provided financial assistance to Christ Hospital while working on a deal, and has provided similar assistance to St. Mary's during the current process. No word on whether St. Michael's is receiving financial help from the company.
In addition to the purchase price of St. Mary’s, Prime has agreed to invest $30 million in capital improvements over the course of five years. The for-profit chain also agreed to hire all current St. Mary’s staff and absorb the collectively bargained contracts with unionized workers.
St. Mary’s has filed for bankruptcy twice in the past several years; in today’s announcement, President and CEO Edward Condit said the deal “has given St. Mary’s an excellent opportunity to not only be viable, but to grow and prosper.”
The deal still needs approval from the state Department of Health for the transfer of the certificate of need and the state Office of the Attorney General for changing a nonprofit organization into a for-profit. And, despite Prime’s agreement to maintain the hospital’s Catholic identity and religious directives, the deal also needs to be approved by the Vatican.
The deal follows the nonbinding letter of intent the parties signed in November.