NJ Hospital Merger Put on Pause After District Court Ruling

A district court recently granted a preliminary injunction against a proposed hospital merger between New Jersey-based Hackensack Meridian Health and Englewood Health.

The organizations jointly announced the deal in late 2019 to build on an existing clinical and academic affiliation.

The Federal Trade Commission (FTC) filed an administrative complaint against the hospital merger deal by December 2020. The compliant raised concerns that the combined health system would control of half of the six inpatient general acute care hospitals in Bergen County, New Jersey, if allowed to close.

“This acquisition would give the combined hospital system increased bargaining leverage, likely leading to increased prices,” Ian Conner, Director of the FTC’s Bureau of Competition, said at the time. “The transaction would also remove the competitive pressures that have driven these hospitals to invest in quality improvements to the benefit of patients.”

Hackensack Meridian Health is the largest health system in New Jersey and operates its flagship hospital, Hackensack University Medical Center, in Bergen County. The non-profit health system also runs 16 other hospitals across the state and over 500 other patient care locations, including ambulatory care centers, surgery centers, and home health services.

Meanwhile, Englewood Health includes Englewood Hospital in northern New Jersey and the Englewood Health Physician Network and the Englewood Health Foundation.

The proposed hospital merger deal had already earned approved from the New Jersey Department of Health and the New Jersey Office of Attorney General.

Both healthcare organizations said they were “very disappointed” with the court’s ruling in favor of the FTC’s challenge.

“This opinion is very unfortunate for the residents that Hackensack Meridian Health and Englewood Health serve. Both organizations still firmly believe that this merger is in the best interest of our patients and the community at large,” the organizations said in a joint statement emailed to RevCycleIntelligence.

Benefits of the deal would include additional investments in community well-being services, care coordination, enhanced access to care, improved care quality, and cost efficiencies, the organizations added.

“Hackensack Meridian Health and Englewood Health will review the judge’s opinion and will evaluate all of their options over the next several days and weeks,” the statement read.

In a separate statement, Lindsay Kryzak, director of the FTC Office of Public Affairs, said, “Too many hospital mergers lead to jacked up prices and diminished care for patients most in need. It remains a mystery why these two hospital systems decided to pursue a highly suspicious merger in the middle of a global pandemic.”

“The Court has hit pause on this merger, which the FTC alleges is unlawful. Hospital executives hatching merger plans should take note,” Kryzak continued.

The pause on the hospital merger deal comes on the heels of an executive order from the Biden-Harris administration that looks to put a chill on healthcare mergers and acquisitions. The order directed FTC and the Department of Justice to “review and revise their merger guidelines to ensure patients are not harmed by such mergers.”

Research indicates that prices may be higher after hospital and health system mergers and acquisitions.

But this line of thinking has been heavily contested by hospital leaders, who argue that these deals actually benefit consumers. For example, a 2019 analysis commissioned by the American Hospital Association (AHA) showed that annual operating experience and revenues per admissions both declined after hospitals were acquired by another organization. There were also statistically significant improvements in outcome measures of quality at acquired hospitals.

FTC announced last week that it is reviewing its merger review processes following a “tidal wave” of filings. The agency warned that processes would need to change in order to increase its capacity to review merger deals for anticompetitive effects.