Taken from the Burlington County Times
January 13, 2019
Virtua announced in June it signed a definitive agreement with Lourdes’ parent company, Maxis, to acquire Lourdes and its hospitals Lourdes Medical Center of Burlington County in Willingboro and Our Lady of Lourdes in Camden. However, the actual merger of the two systems is still pending approval by the state Attorney General’s Office, which must review all sales and mergers of hospitals to ensure it serves the public’s interest.
Virtua Health’s planned merger with Lourdes Health System and the acquisition of its hospitals in Willingboro and Camden could become a game changer for South Jersey’s health care landscape, but it will be permitted to proceed without input from a Department of Health advisory board.
Virtua announced in June it signed a definitive agreement with Lourdes’ parent company, Maxis, to acquire Lourdes and its hospitals, Lourdes Medical Center of Burlington County in Willingboro and Our Lady of Lourdes in Camden. However, the actual merger of the two systems still is pending approval by the state Attorney General’s Office, which must review all sales and mergers of hospitals to ensure it serves the public’s interest.
The sale of hospitals or health care systems in New Jersey typically require a Certificate of Need review by the New Jersey Department of Health, which usually involves a public hearing before the State Health Planning Board. The advisory board would then make a recommendation to the commissioner of the Department of Health on whether the sale should move forward.
But Virtua will be able to bypass that process for its proposed merger because it is not actually purchasing Lourdes or its assets.
The health system’s president and chief executive officer described the company’s reasoning in an Oct. 4 letter to the Department of Health’s Certificate of Need and Healthcare Facility Licensure division, describing the merger as a “sole-member substitution” where one nonprofit takes over another. In this case, Virtua is replacing Maxis as Lourdes’ parent company.
The letter was obtained from the Department of Health through an Open Public Records request. No response from the department was provided but Virtua officials said Friday that the department has agreed the proposed transaction is exempt from the Certificate of Need requirements.
Virtua spokesman Dan Moise also said residents and stakeholders still will be able to weigh in on the proposal as part of the Attorney General’s ongoing review, which is required by the state’s Community Health Care Assets Protection Act.
No public hearing date or location has been announced.
Virtua and Lourdes are not the first two health care systems to merge without undergoing a Certificate of Need review. North Jersey’s Barnabas Health and Robert Wood Johnson University Hospital also used a “sole-member substitution” process to combine in March 2016 to form RWJBarnabas Health, the state’s largest health care system with 11 acute-care hospitals, four hospitals for children, a behavioral health facility and numerous outpatient sites.
The proposed Virtua-Lourdes merger would not be as large but still would be significant, particularly in South Jersey, where Virtua and Cooper University Health Care dominate the health care market.
Evesham-based Virtua currently operates two hospitals in Burlington County — Virtua Memorial in Mount Holly and Virtua-Marlton in Evesham — plus a third hospital, Virtua Voorhees in Camden County, and several ambulatory care centers and other health care facilities across South Jersey.
The nonprofit health care system employs about 9,000 people, predominantly in Burlington and Camden counties, making it one of the region’s largest private sector employers.
Under the proposed merger, Lourdes Medical Center of Burlington County on Sunset Road in Willingboro and Our Lady of Lourdes Medical Center in Camden would become part of Virtua, along with the Lourdes School of Nursing, Lourdes Medical Associates and Lourdes Cardiology Services. Lourdes also operates a satellite emergency department at the Deborah Heart and Lung Center in Pemberton Township that would also fall under Virtua’s control.
The deal does not include St. Francis Medical Center in Trenton, which will remain under Maxis.
Virtua’s move to merge with Lourdes came about after a similar August 2017 deal between Maxis and Cooper University Health Care fell through. Under that proposal, Cooper was expected to acquire both Lourdes hospitals and St. Francis Medical Center.
Cooper wound up terminating the deal four months later and now is involved in litigation with Maxis to recover millions in funds it spent on “due diligence” related to the scuttled proposal.
While the Virtua-Lourdes merger itself may not require a Certificate of Need to move forward, Virtua will be required to apply to the New Jersey Department of Health for new licenses for the hospitals and other facilities that the nonprofit is acquiring.
Also, while Virtua has not yet specified its intentions for the two new hospitals or the satellite ER at Deborah, it likely would be required to obtain Department of Health approval to close or expand either hospital.
Virtua already has announced plans to develop a $1 billion health care system campus off Route 541 in Westampton, which will include a 338-bed hospital to replace Virtua Memorial in Mount Holly.
Lourdes Medical Center of Burlington County, which has about 173 beds, is about five miles from the proposed Westampton campus.
In Virtua’s Oct. 8 letter to the Department of Health, President and CEO Dennis Pullin said the proposed merger between the two health systems would “provide substantial benefits to the residents of the service area and will help to ensure long-term stability of both organizations.”
“The Agreement provides for the ongoing commitment of both organizations to enhance the access to tertiary and community services throughout the combined service areas,” Pullin wrote. “We will engage in a collaborative and fiscally responsible transition and ultimate integration that builds sustainability and align to the needs of those we serve, allowing us to strengthen our relations with our most vulnerable neighborhoods.”
While the proposal has raised questions about the future of Lourdes’ Willingboro hospital, the deal also could cause a shake up due to Lourdes’ cardiac surgery license at Our Lady of Lourdes in Camden.
By acquiring that hospital, Virtua could be eying a potential expansion of its cardiac services, including non-emergency artery-clearing angioplasties, which has been a contentious issue in New Jersey for years.
During an angioplasty, a doctor inserts a small balloon into a blocked artery in order to remove the blockage and widen the artery. A small metal coil, called a stent, is often then inserted to prop open the artery and decrease its chance of narrowing.
All hospitals are permitted to perform the procedure during emergencies, typically heart attacks, to clear a blockage. But elective or non-emergency angioplasties, which are performed to help reduce a patient’s risk for future heart attack or stroke, are permitted only at licensed centers to perform cardiac surgery, as well as 11 others that participated in a nationwide trial undertaken by John Hopkins University close to a decade ago to determine if the procedure could be safely performed without on-site surgical backup.
Virtua Marlton was among the 11 hospitals that participated in the trial, known as the Atlantic Cardiovascular Patient Outcomes Research Team Elective Angioplasty Study, or C-PORT-E.
The New Jersey hospitals’ participation sparked a lawsuit by the Deborah Heart and Lung Center and other cardiac hospitals, but the legal challenge was not successful and the 11 hospitals were able to continue to participate in the study, which was completed in 2012 and concluded that patients who had the procedure at the trial hospitals faced no greater risk of death or complications than those at hospitals where cardiac surgery is performed.
Following the study, New Jersey allowed the 11 hospitals that participated in the trial to continue performing the elective procedure as a demonstration project. But state legislation has been proposed to allow other hospitals to perform the procedure, provided they are part of the same network as another hospital with a licensed cardiac surgery facility, among other criteria.
If the legislation becomes law and the merger is approved, Virtua would potentially be able to perform the elective procedure at its other hospitals besides Our Lady of Lourdes and Virtua Marlton.