New Jersey Health Systems Terminate Hospital Merger Agreement

New Jersey-based Hackensack Meridian Health and Englewood Health have terminated their hospital merger agreement after a federal appeals court blocked the deal from moving forward.

In March 2022, the US Court of Appeals for the Third Circuit ruled against the transaction, stating that the hospital merger would hurt competition and increase healthcare prices for consumers.

Specifically, the ruling noted that the merger would have eliminated the incentive for Englewood Health to outperform Hackensack Meridian Health in hospital safety, patient experience, nursing recognition, and healthcare-associated infection rates.

The hospital transaction also faced pushback from the Federal Trade Commission when the agency filed an administrative complaint in December 2020, alleging that the deal would hurt competition. If the transaction had been finalized, the merged health system would have controlled three of the six inpatient general acute care hospitals in Bergen County, New Jersey.

Additionally, the US District Court of New Jersey granted a preliminary injunction against the deal in August 2021, putting the hospital merger on pause.

In their recent motion to dismiss, Hackensack Meridian Health and Englewood Health requested that FTC dismiss its complaint as the health systems are no longer proceeding with the merger deal.

“After the US District Court for the District of New Jersey granted the Federal Trade Commission’s motion for a preliminary injunction pending an administrative trial on the merits in this action, and the US Court of Appeals for the Third Circuit affirmed that decision, Respondents have jointly agreed to terminate their merger agreement and abandoned [Hackensack Meridian Health’s] proposed acquisition of Englewood,” the document stated.

According to the court filing, the board of trustees for the health systems voted to end the merger agreement on March 24 and 30, 2022. The health systems then notified FTC and withdrew their merger application for the proposed transaction.

The health systems initiated the merger process when they signed a definitive agreement in October 2019. Hackensack Meridian Health had planned to acquire Englewood Health with an investment of $400 million.

Hackensack Meridian Health is the largest hospital system in New Jersey, operating Hackensack University Medical Center, Pascack Valley Medical Center, and 15 additional hospitals. Englewood Health operates Englewood Hospital in Bergen County, the Englewood Health Physician Network, and the Englewood Health Foundation.

Despite the legal pushback, the healthcare merger had received support from multiple hospital groups, including the American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC).

The groups argued that FTC’s challenge of the hospital merger was based on a flawed methodology.