With the eleventh-hour decision to call off the sale, the big question is what will happen to the hospital.
MANNINGTON TWP. -- The same day the state approved a deal to sell the ailing Memorial Hospital of Salem County to a California-based healthcare provider, the deal was scrapped, officials confirmed Tuesday.
The non-profit Prime Heathcare Foundation had agreed to purchase the hospital for $15 million from its owner, for-profit Tennessee-based Community Health Systems.
"Prime Healthcare continues its dedication to creating a strong future for community hospitals and we are applying our resources to other strategic priorities," said company spokeswoman Elizabeth Nikels in confirming Prime had withdrawn from the deal.
She said the New Jersey Department of Health was notified of Prime's decision on Monday. That is the same day that the state gave final approval to the deal.
The question is now what this means for the hospital which has been losing money, staff and patients over the past decade, according to papers filed with the Department of Health in connection with the request for approval of the Certificate of Need required for the sale to go through.
No one gave an exact reason as to what caused the deal to be scuttled at the eleventh hour.
"We are committed to the success of our affiliated hospitals and will review strategic planning for Salem in the coming weeks," CHS spokeswoman Rebecca Ayer said Tuesday.
Ayer, who declined further comment, said hospital employees were told Tuesday.
The proposed sale was first announced Dec. 1, 2015. It has taken more than two years to wind its way through the regulatory process.
When the New Jersey State Health Planning Board held a public hearing in January, many involved with the hospital pleaded for the sale to be OK'd.
"It is very hard to recruit not only physicians, but nurses because of the level of uncertainty we have, said Dr. Wamiq Sultan, Memorial Hospital's chief of staff at that hearing.
"I have seen good nurses and physicians leave because of the uncertainty," he told state officials at the hearing.
He said there is now only one surgeon left in the community. "It's almost close to a disaster," he said. He said the "state of flux" needs to end with a decision from the state.
Hospital sale could mean big tax loss
The Planning Board recommended approval of the Certificate of Need on Feb. 2, forwarding the final decision to state Commissioner of health Cathleen Bennett who granted final approval in a letter dated May 8.
In that letter, Bennett noted "... CHS ... determined that a transfer of the hospital assets to Prime Salem will strengthen the hospital, positioning it to meet the health care needs of the residents of Salem County in the most optimal manner. The application notes that the only option to the transfer of ownership of Salem Hospital is the closure of the hospital, which CHS considered and determined to be an unacceptable option given the absence of available acute care services in the area."
The commissioner noted that Prime said "... the hospital's affiliation with a strong partner will provide the necessary infusion of capital that will enhance the functional and operation efficiencies , will attract additional talented medical staff, and will provide the strategic leadership and assets needed for Salem Hospital to continue its mission to provide quality affordable care for the residents ..."
Among the many conditions that Bennett included in her letter was that the process begin to return $50 million from the Salem Health and Wellness Foundation and the Morris-County based Community Foundation of New Jersey to the hospital.
That money came from the original sale of the hospital to CHS in 2002.
"We admire and appreciate the medical staff and employees we've come to know at The Memorial Hospital of Salem County, and we thank all those who were involved in the regulatory and due diligence process," Nikels said in an email Tuesday.
Memorial Hospital was founded in 1919 in downtown Salem City. In 1951 it moved to its current location in Mannington Township.
Then non-profit hospital was sold in 2002 for $35 million to the for-profit Community Health Systems. Proceeds from the sale went to create the Salem Health and Wellness Foundation to provide health services in the county that the hospital did not.
During its ownership under CHS, the hospital has closed its maternity ward and gone from a state-registered 140-bed facility to a 126-bed facility.
It has long been one of the county's major employers.
Memorial Hospital has faced ever-stiffer competition from neighboring, much larger healthcare systems such as Cooper, Inspira and Christiana.
Bill Gallo Jr. may be reached at bgallo@njadvancemedia.com. Follow Bill Gallo Jr. on Twitter @bgallojr. Find NJ.com on Facebook.