NJBIZ Exclusive Despite challenges, Prime exec still has big plans for New Jersey

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Luis Leon is confident Prime Healthcare Services will build its footprint in the state. Leon, the president of operations at the for-profit health system, said he firmly believes the state will approve the California-based company’s plans to acquire Denville-based Saint Clare’s Health System. And he said Prime is forging ahead with the…

Leon, the president of operations at the for-profit health system, said he firmly believes the state will approve the California-based company’s plans to acquire Denville-based Saint Clare’s Health System.

And he said Prime is forging ahead with the acquisition of Saint Michael’s Medical Center in Newark, despite a recent state-commissioned study by Navigant that recommended the hospital be converted to an ambulatory care facility to ease an oversupply of hospital beds in the Newark area.

“I’m sure the Navigant report is not going to make it any easier, but I don’t think it’s necessarily going to impede our progress,” he told NJBIZ.

As for Saint Clare’s, Leon said he is hopeful Prime will get state approval to acquire the facility in the next 60 to 90 days.

RELATED: Saint Michael’s counters Navigant report with its own study

“We are looking forward to finally starting to manage the hospital and serve the community,” he said.

Plans include developing more behavioral health services, and, at the system’s Dover hospital,   Leon said Prime is looking at providing several new services, such as acute rehab and dialysis.

Leon also talked up the upgrades the company already has made at St. Mary’s in Passaic, a sale the state already approved last year.

Leon was in New Jersey for public hearings on the Saint Clare’s sale, which has already been approved by the state Health Planning Board; the hearings were conducted by the state Attorney General’s office, which under state law regulates the transfer of nonprofit hospitals to for-profit entities. 

Leon touched on a number of issues involving Prime and being a for-profit hospital in a state that has few of them.

On for-profit ownership of hospitals:

Critics of for-profit hospital ownership have sought assurances that Prime will keep its New Jersey hospitals open for at least 10 years; the Saint Clare’s sale agreement makes a five-year commitment, which Leon said is standard in the industry.

But when asked how long Prime intends to keep Saint Clare’s open, Leon had a one-word answer:  “Forever.”

“(Prime) has never closed a hospital and we have never sold a hospital,” he said. “We did our first hospital acquisition in 2003 and the agreement is always five years, but we have never closed a hospital.”  

On the Navigant report:

Last month the state released a report it had commissioned from the hospital consulting firm Navigant Inc., which recommended that, of the five hospitals in the greater Newark area, three of them — Saint Michael’s, East Orange General Hospital and Newark Beth Israel Medical Center — cease operating as acute care hospitals and instead be renovated into modern ambulatory facilities.

Navigant proposed that the state invest about $1 billion in hospital upgrades, including a major renovation of University Hospital, which would then partner with Newark Beth Israel; Belleville’s Clara Maass Medical Center would remain an acute care hospital.

Leon said the sale of Saint Michael’s to Prime has the support of the Newark City Council and community stakeholders.

“We are rallying all those forces alongside ourselves for the betterment of the community — we are very much engaged. Of course we wish the Navigant report was not something else we have to deal with, but we have to just keep plodding along and put in some extra effort.”

Leon said the hospital beds in a region shouldn’t be a factor.

“You might have 4,000 beds in the community, and everybody might be using 2,000,” he said. “It’s not the amount of beds; it’s the availability of the hospitals serving that community. It’s not the beds; it’s the facility that counts. And not having Saint Mike’s in the heart of Newark would be devastating to the community. They need a full-service hospital.”

On concerns that moving a hospital from nonprofit to for-profit status will lead to cutbacks in less-profitable services:

“We promise that we will keep our charity care the same or higher,” Leon said.

He pointed out that Prime is regulated by the same state and federal laws that require hospitals to care for patients who show up in the emergency room with no insurance.

“We need to see them; we cannot refuse anybody,” Leon said. “(The community) will be well cared for, and on top of that, we pay taxes to cities and to the state.”

On what’s going on at St. Mary’s:

Leon noted that Prime has agreed to invest millions in St. Mary’s, and that work has begun.

“We put a lot of emphasis on quality of care and technology,” he said.

Prime acquired St. Mary’s last August.

“If you tour St. Mary’s today, you will see a lot of things that were not there seven months ago — new beds, new monitors, new elevators — we are in the process of remodeling some of the floors,” he said.

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