The New Jersey Department of Health has recommended State Health Commissioner Mary O'Dowd approve the sale of St. Mary's Hospital in
After reviewing the proposed transaction, health department staff concluded the sale is crucial to the hospital's survival. "Financial conditions at St. Mary’s under the present ownership would place the continued operation of St. Mary’s at risk and could eventually lead to unplanned closure, significant reduction of services or bankruptcy," staff members wrote in their transaction evaluation report.
According to the report, St. Mary's has been struggling financially for a number of years and has received $34.3 million in stabilization grants from the health department and $5.6 million from the treasury department to cover debt service payments since 2009. The hospital currently has about $39 million in long-term outstanding debt and $5.1 million in a working capital line of credit.
Last December, the state's attorney general and health department approved Prime's application to acquire St. Mary's. The hospital signed a letter of intent to sell to private, for-profit Prime in November 2012 and finalized a binding asset purchase agreement in January 2013. Prime has agreed to invest roughly $30 million in capital improvements at St. Mary's during the course of five years. The purchase price was initially estimated around $25 million.
The State Health Planning Board will consider whether to recommend the sale at a meeting tomorrow.
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