St. Michael's to be Bought by...Beth Israel?

Tuesday, 08 September 2015 14:43 Walter Elliott



Barnabas Health's Aug. 18 filing to bid for St. Michael's Medical Center here may strike some as a twist in a romantic drama.

An attorney for Barnabas Health - which owns Newark Beth Israel and Belleville's Clara Maass hospitals plus its namesake flagship in Livingston - said to a "Health Affairs" reporter that it had identified itself to the U.S. Federal bankruptcy Court here as "a possible bidder and party in interest" to St. Michael's.

St. Michael's, however, has a merger deal with Prime Healthcare, of California, for the last 31 months. They have been waiting for the New Jersey Attorney General's Office to issue its report and, hopefully, approve their agreement.

St. Michael's and Prime can be likened to a bride and groom waiting for the local justice of the peace to preside over their wedding vows.

The state AG, however, has been silent. St. Michael's administrators, who have stressed that Prime was the only suitor that matched their 54-point criteria, have meanwhile filed Chapter 11 bankruptcy Aug. 10.

The bankruptcy protection was to help St. Michael's pay its 1,400 employees and its vendors while holding off on repaying the state some $2 million in bod notes. Those notes were issued by the state when St. Michael's agreed to take in staff and patients from Columbus and St.James hospitals in 2010. (St. James, in the East Ward, and Columbus, in the North Ward, became acute care medical centers.)

St. Michael's filing doubled as a prod to the AG, and perhaps Gov. Christopher Christie, to make a decision.

While the bride and groom - St. Michael's and Prime - await official blessing, Barnabas Health comes in like an 11th hour suitor.

Barnabas Medical had reportedly made an overture to St. Michael's in 2012 - but with the intention to close it. St. Michael's loss would leave Barnabas and University Hospital serving Newark and its neighboring towns. That result, cite Central Ward Councilwoman Gayle Chaneyfield-Jenkins and other critics, would create a virtual health care monopoly in urban Essex County.

Barnabas, already New Jersey's largest health care provider, is getting bigger. It has a memorandum of understanding over the summer with Robert Wood Johnson Health Care to absorb that New Brunswick-based network.

St. Michael's, should Barnabas Health's wooing be successful, has a "prenuptial agreement" with Prime. It would pay Prime some $5 million for all its negotiated investment.

Will St. Michael's stay with Prime? Will it choose Barnabas? What is Barnabas' intentions? Will the state grant its blessing in time? As they say in the soap operas, "Stay Tuned."

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