St. Michael's Medical Center in Newark, N.J., has notified health plans their existing contracts will be terminated May 1, reports NJBiz.
The news comes days after a superior court judge gave final approval for Ontario, Calif.-based Prime Healthcare Services to acquire St. Michael's for $62 million.
Below are four things to know about the voided contracts.
1. The termination letters surprised many insurers that have contracts with St. Michaels. HealthRepublic of New Jersey CEO Robert Meehan told NJBiz his company did not anticipate the letter because "it is countering the public statements made by Prime." In a statement released April 12, Prime said it is committed to maintaining St. Michael's existing health insurance contracts during the acquisition.
2. Aetna and Horizon Blue Cross Blue Shield confirmed they also received termination letters from the hospital. Aetna's contract with St. Michael's had just been renewed for another year April 1.
3. Each insurer that reported getting termination notices expressed optimism they will be able to form new contracts with the hospital.
4. Bruno Tedeschi, a St. Michael's spokesman, said the contract terminations are a "standard part of the negotiating process" as the hospital pursues new contract discussions "to ensure patients are well-served". Mr. Tedeschi said St. Michael's continues to negotiate in good faith with insurers to maintain future relationships.