State gives St. Michael's the deal Muhlenberg needed

While Muhlenberg is being closed down, the state will lend Catholic Healthcare East $253M in taxpayer-funded bonds to keep Newark's St. Michael's Hospital open. This is the kind of deal Muhlenberg needed, but did not get. Was that because Solaris didn't want it or that Assemblyman Green was powerless to get it?

According to the Ledger's continuous news desk story, the money will be used to 'erase debt, replace outmoded equipment, and expand facilities'.

All that Muhlenberg needs is help with its charity care obligation, which, by state law, it cannot sidestep.

The print edition of the Ledger this AM includes even more details --

The loan will erase debt, replace outmoded equipment and expand facilities. It helps cement Saint Michael's future when half of New Jersey hospitals operate in the red. Seven hospitals have closed since 2007, and an eighth -- Muhlenberg Regional Medical Center in Plainfield -- will shut on Aug. 13.

"Given that the city of Newark faced catastrophic closure of three hospitals, this investment maintained access to care for the residents of the community," said Donna Leusner, spokeswoman for the state Department of Health.

But the Corzine administration's decision to go into debt to bail out Saint Michael's revived criticism that the state cannot control its spending.

"Further debt without voter approval concerns me, to the extent the state is on the hook," said Sen. Leonard Lance (R-Hunterdon), an outspoken critic of state borrowing.

The bond deal was assembled by the New Jersey Health Care Facilities Financing Authority, and the state treasurer and health commissioner approved the bond sale.

State taxpayers will pick up $8.8 million next year to begin paying back the loan. The state would pay $16.5 million a year from 2010 to 2013 if the hospital continues to struggle, said Mark Hopkins, the authority's executive director. If the hospital is making money based on a formula set by the state, it could pick up the payments as early as the second year and repay the state. The hospital is scheduled to assume the loan no later than 2014, Hopkins said.

The state's share of the payments will come from the state budget, which currently sets aside $2.5 billion to repay debt, Treasury spokesman Tom Bell said.

Isn't Newark one of the 'overbedded' areas?

Can you not almost spit from St. Michael's and hit University Hospital?

In New Jersey, it appears the only 'P' that counts is not 'Principle', but 'Politics'.

Read the story here: "Newark's St. Michael's Medical Center sold".

See the morning print edition here: "Bond deal will keep St. Michael's running".