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Sale of St. Mary’s Hospital to For-Profit Chain Moves Closer to Approval

Unions’ reactions reflect continuing debate over drawbacks and benefits of takeover by Prime Healthcare

Mary O'Dowd
State Health Commissioner Mary E. O’Dowd

Foes of the expansion of for-profit hospitals in the state have been dealt a major blow. A key state board has rejected their claim that the bid by for-profit chain Prime Healthcare Services to buy St. Mary’s Hospital in Passaic will lead to cuts in service unless there is close monitoring by the state.

The New Jersey State Health Planning Board, which cast the vote, has as its sole responsibility to advise the state health commissioner on whether to allow hospitals’ ownership to be transferred, as well as whether hospitals are opened or closed. Its voting members are appointed by the governor with the consent of the Senate and include four healthcare providers and four consumers. The board’s recommendations, which generally are followed by commissioners, didn’t include the opponents’ request for the state to require that an independent monitor oversee the hospital.

If state officials and a judge uphold the board’s vote, the hospital’s license would be transferred from nonprofit to for-profit status.

Opponents of the proliferation of for-profit hospitals see Prime’s possible entry into the state as a key battle.

They note that the company has been under investigation by federal authorities over its billing practices and argue that the California-based company should only be allowed to take over the hospital if the state tacks on a series of requirements to the purchase..

That step seems unlikely in the wake of the board’s recommendation on Friday. Prime has defended its track record of operating 25 hospitals, emphasizing that it hasn’t closed any of its hospitals since launching in 2001

But the proposed St. Mary’s sale has put the state’s two largest healthcare unions on opposite sides of the issue.

St. Mary’s union for nurses and technicians ,JNESO, has already reached a contract agreement with Prime and wants the sale to move forward, while the Health Professionals and Allied Employees (HPAE), which represents nurses at other hospitals, wants the state to put conditions on the sale before approving it.

The Campaign to Protect Community Health Care, a coalition of labor, community and healthcare-advocacy groups that includes the HPAE, criticized the state board’s vote. The campaign has asked for an independent state monitor to ensure that Prime upholds its commitments.

Campaign spokeswoman India Hayes Larrier said in a statement that state Department of Health recommendations that fed into the planning board decision were flawed.

She said that the coalition was pleased that St. Mary’s will remain open, but frustrated that the state hasn’t asked for conditions on the license transfer “that would protect safety, access to care and the rights of hospital employees.”

JNESO officials, on the other hand, were pleased with the board’s vote, noting that the hospital could close if the sale doesn’t go through.

JNESO Executive Director Doug Placa described the board’s recommendation a positive step for the union’s members.

“Today’s vote brings us one step closer to ensuring St. Mary’s Hospital’s survival,” Placa said.

Supporters of the sale have noted the ties between state-based opponents and the Service Employees International Union, which has battled Prime in California.

SEIU officials have said that, based on their experience in California, New Jersey hospitals can expect reduced services, staff layoffs, increased use of expensive testing and cancelled insurance contracts.

Prime supporters have said that SEIU has been unfairly attacking Prime because the company hasn’t agreed to the union’s contract demands.

Timothy Foley, political director of SEIU’s Committee of Interns and Residents, weighed in on state health officials’ support for the sale.

“Prime’s track record in other states is clear and ongoing,” said Foley, whose union represents medical residents at Saint Michael’s Medical Center in Newark. “Given the severity of the alleged past business practices by (Prime), we should not just take their word that they intend to approach St. Mary’s differently.”

The sale faces three final hurdles before it is made final.

Both Health Commissioner Mary E. O’Dowd and Acting Attorney General John Jay Hoffman must decide whether to support it. After that, a Superior Court judge will have the final say.

Prime also is pursuing acquisition of four other hospitals in the state: Saint Michael’s and the three Saint Clare’s Health System hospitals in Boonton, Denville and Dover.

JNESO, which also represents the nurses at Saint Michael’s, said it hopes to reach a contract agreement with Prime at Saint Michael’s after the state approves the St. Mary’s sale.

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