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Opponents of Hospital Purchase Seek Repeat of Successful Fight to Stymie St. Mary’s Sale

Other options seen for St. Mary’s and Saint Michael’s while would-be buyer warns they might close if deals aren’t approved.

Prime Healthcare Services stopped short of a New Jersey hospital purchase once before, and its opponents are hoping that will happen two more times.

The coalition of labor unions and consumer advocates that successfully opposed Prime’s proposed purchase of Christ Hospital in Jersey City are using similar tactics – including focusing on investigations of Prime’s Medicare billing practices.

The coalition is calling for a halt to Prime’s proposed purchase of St. Mary’s Hospital in Passaic and Saint Michael’s Medical Center in Newark due to two ongoing federal investigations into the California-based for-profit hospital operator.

“I seriously believe there are other options,” said Renee Steinhagen, executive director of New Jersey Appleseed Public Interest Law Center and a member of the coalition.

This is contested by Prime officials, who said that the company’s purchases of the hospitals are necessary. St. Mary’s officials have said the hospital will close if Prime doesn’t buy it.

The latest round of sparring over the sales has focused on two federal investigations of Prime, which the company disclosed to Rhode Island officials while pursuing a hospital purchase there. One investigation focuses on the company’s Medicare billing practices, while the other is examining alleged violations of patient confidentiality.

“They’re of such a severe nature,” said Phyllis Salowe-Kaye, executive director of the nonprofit watchdog group New Jersey Citizen Action. “It just seems like the thing to do is wait for the feds to finish their investigations. In the meantime, they should open the process to other potential bidders.”

Prime spokesman Fred Ortega rejected calls for halting the sales. He alleged that the coalition “would rather St. Mary’s and Saint Michael’s close than become top-ranked hospitals.” Company officials have said union opposition is behind a national campaign against Prime, which has clashed with unions in its home state.

St. Mary’s spokeswoman Vanessa Warner said the selection of Prime was based on a lengthy process and that the hospital had exhausted other possibilities. She added that 1,200 jobs would be lost and that patients would stand to lose access to life-saving emergency and acute care at St. Mary’s.

“At this point, given our present financial situation, not only is Prime the best alternative, it is St. Mary’s last alternative,” Warner wrote in an email. “Without Prime, St. Mary’s will close – and that would be a catastrophe for the entire city.”  

Salowe-Kaye noted that Christ Hospital officials made similar comments before Prime ended its attempted purchase of the facility. The for-profit operator of Hoboken University and Bayonne medical centers ultimately purchased it.

“We certainly don’t want our hospitals to close,” Salowe-Kaye said, adding that the threat of closure is a frequent strategy. “This is said all of the time with hospitals. It turns out that there are other bidders. Christ Hospital didn’t close and it’s serving its community.”

Salowe-Kaye said any purchaser of the hospitals must make a greater commitment to meet the community’s needs than Prime has.

The Prime purchase of St. Mary’s was made possible by the state agreeing to assume some of the hospital’s debt, Steinhagen noted. She predicted that some other hospital owners – including nonprofit operators – would be interested in St. Mary’s if it was clear that the hospital’s debt would be reduced.

While Prime has highlighted its plan to maintain St. Mary’s as an acute care facility, Steinhagen said the site could have more potential to meet local community needs by focusing on outpatient treatments and other medical uses.

Steinhagen also noted that Prime didn’t focus on behavioral health – a key service provided at St. Mary’s – in its proposals for the facility. However, both Prime and St. Mary’s officials said yesterday that the company is committed to maintaining behavioral health services at the hospital.

While Saint Michael’s may be a stronger position if Prime’s bid isn’t successful, hospital officials there have also said that Prime is in the best position to operate the hospital successfully.

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