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Prime Healthcare Acquires Saint Michael’s Medical Center


Prime Healthcare, the acquisitive healthcare group based out of Southern California, finally completed on its three year battle to purchase of Saint Michael’s Medical Center in Newark, New Jersey which was finally approved on Friday.

The approval came in after proving previous turnaround successes with hospitals in similar situations as Saint Michael’s.  Over 50,000 signatures were brought in for a petition to let the deal come through.

For the acquisition, Prime has agreed to continue the mission of the acute care services provided by Saint Michael’s for the next five years.  In addition, Prime has agreed to hire the hospital’s 1400 hospital employees. This is great news for current employees as it is giving them current job security, and the existing health insurance contracts will be maintained as is.  Lastly, Prime has agreed to maintain current levels of charity care.

Previously exempt from paying property taxes, Saint Michael’s will now have to pay property taxes under Prime.

The bid Prime put in for Saint Michael’s went from $50 million to $62 million in a small bidding war with another interested health system.  The increase in bid also increased the amounts pledged to invest in updating, upgrading, and modernizing the Newark hospital.

The delay which began in December of 2012 put Saint Michael’s further back on plans for advancement and brought uncertainty to the hospital when reports suggested the hospital be converted from an acute to ambulatory hospital.  The on-going consideration of the transaction along with the events gave reason for Saint Michael’s to file for bankruptcy in August of 2015.  According to Cathy Spence, COO, Global Healthcare IT, Inc. “This further illustrates the heating up of the M&A markets in the hospital sector.  With the ongoing, federally encouraged need for EMR implementations, and the associated penalties for non-compliance, alongside the aggregation of larger patient populations needed to create viable ACO/PHM systems, non-compliant hospitals are motivated to either merge, or be acquired.”  A further driving force in the consolidation activity is the creation of larger hospital systems to take advantage of the ACA’s MSSP program.  These larger healthcare entities will further push economies of scale, and generate more useful data.  Use of this data could lead to better healthcare data analysis, and the ability to more clearly identify improvements in services.  All of which are key to getting value out of Population Health Management.

Founded in 2001 by founder Dr. Prem Reddy, Prime Healthcare has been on a 10+ year tear across the USA acquiring new hospitals.  It is expected that Prime will go on to roll out the Epic EHR in the newly acquired Saint Michael’s.