Bankruptcy Judge OKs St. Mary's Hospital's Reorganization Plan

John Commins, February 4, 2010

St. Mary's Hospital in Passaic, NJ, says its reorganization plan was confirmed this week by a federal bankruptcy judge.

"St. Mary's emerges from Chapter 11 stronger and better than before," said Michael J. Sniffen, St. Mary's president/CEO, in a media release. "After less than one year, we emerge revitalized, improved, and re-committed to serving the community and the physicians that have so loyally supported us through this difficult process."

"We have already laid the groundwork for the hospital's renewal by opening a new ER fast track, acquiring new technology for our cardiology and oncology programs, and expanding other key services. This will be a banner year for St. Mary's Hospital and the community it so proudly serves," Sniffen said.

St. Mary's, a 292-bed nonprofit acute care hospital that is sponsored by the Sisters of Charity of Saint Elizabeth, is the first hospital to emerge from Chapter 11 bankruptcy in New Jersey. Since 2007, six New Jersey hospitals have filed for bankruptcy, five of which have either closed or sold their assets in bankruptcy.

"Hospitals across the state have struggled with a long list of financial pressures and policy burdens," said New Jersey Hospital Association President/CEO Betsy Ryan. "How encouraging it is to see one of our hospitals emerge from these many challenges and continue to serve their community with the healthcare services we all depend on. That's especially true for this community, where as many as three hospitals once stood in the not-so-recent past."

St. Mary's declared bankruptcy in March 2009, claiming debts of $100 million. Since then, more than 500 hospital employees, including nurses and technicians, have agreed to work for a 5% pay cut—which the hospital later reduced to 4%—through the reorganizing process. As part of the agreement, St. Mary's will restore the cuts incrementally, along with some pay raises, in the coming months.

Virginia Treacy, RN, executive director of Jersey Nurses Economic Security Organization District 1, a healthcare union that represents 5,000 hospital and clinic workers in New Jersey and Pennsylvania, called the announcement "a wonderful development for the hospital and its union employees, as well as for the community at large."

"In particular, Mr. Sniffen's willingness to offer us a true partnership has helped strengthen our commitment to work together toward a positive future for St. Mary's Hospital," Treacy said in the media release.

In December, St. Mary's was one of nine financially troubled hospitals in New Jersey that shared $40 million in state grants to maintain critical care services.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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