Business

Big NJ hospital merger killed after federal court says it would cost patients too much

March 22, 2022

A federal appeals court on Tuesday upheld a decision blocking the planned merger of Englewood Hospital and Medical Center with Hackensack Meridian Health out of concern raised by the US Federal Trade Commission the deal would have driven up the price of hospital care in Bergen County.

If Hackensack acquired Englewood — its most significant competitor — Hackensack would control three of the six hospitals in Bergen County, the FTC argued when it challenged the merger in 2020. The FTC filed an injunction blocking the sale, and a US District Court Judge granted it . The hospitals appealed.

In the ruling Tuesday, issued by the Third Circuit Court of Appeals, Judge D. Michael Fisher agreed the deal would not serve the cost-conscious public.

“Prices would undoubtedly increase, as evidence has shown with previous mergers by Hackensack Meridian, one of the largest health care providers in New Jersey,” the decision said.

An FTC expert even put an estimated dollar figure to it: $31 million in higher prices, based on peer-reviewed analyses.

“The District Court linked on previous Hackensack merger contracts to conclude the merger would lead to anticompetitive price increases. Contracts between Hackensack and facilities it had merged with in the past show Hackensack’s ability to raise rates.”

Hackensack has spent more than a decade acquiring independent hospitals, which have generally struggled to compete in an ever consolidating health care market and negotiate with insurance companies. Englewood would have been Hackensack’s 13th acute-care facility. The network pledged to invest $439.5 million in improvements over eight years.

The hospitals argued the efficiencies in merging certain operations would net savings. But the district court found and the appeals court agreed, that while these benefits “may exist, but they are not significant enough to offset the likely anticompetitive effects of the merger.”

Shortly after the ruling, Englewood released a statement saying the institution “remains strong.”

“Although this is not the decision we had hoped for, we entered merger planning from a position of strength. Englewood Health continues to thrive and remains strong,” a statement from the hospital said.

Englewood President and CEO Warren Geller said there are plans to continue expanding outpatient care facilities, where 70% of patients are now treated. A 73,000-square-foot walk-in, primary care and specialty care facility is planned in Jersey City.

Meanwhile, the hospital’s foundation raised $18 million in the past year, he said.

“We are growing,” he said.

The abandoned merger will not affect the current staff, Geller said. “No jobs are going away as a result of this court decision, by any means,” he added.

“I see nothing but a bright future for us,” he said.

Officials at Hackensack Meridian Health in a statement said they were “disappointed” with the ruling.

“We firmly believe this merger is in the best interest of our patients and the community at large. At this time, we are weighing the next steps that are in the best interest of the communities we serve,” the statement said.

The American Hospital Association, Association of American Medical Colleges, the New Jersey Hospital Association, and the African American Chamber of Commerce of New Jersey backed the merger, the statement noted.

The New Jersey Attorney General and the state Health Department had signed off on the merger.

The FTC’s aggressive action to halt the merger made nationwide news, prompting 26 state Attorneys General to file a friend of the court brief in support of the FTC. Nine major hospital trade organizations, including the New Jersey Hospital Association, filed briefs in favor of the deal.

Pennsylvania Attorney General Josh Shapiro challenged the merger, stating “Ensuring that there is strong competition in the health care system helps keep prices down and still provides patients with quality care,” he said.

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NJ Advance Media Staff Writer George Jordan contributed to this report.

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio.