Deal off for now: Federal judge halts Hackensack Meridian acquisition of Englewood Health
Taken from North Jersey
By Lindy Washburn
August 6, 2021
A federal judge this week temporarily blocked Hackensack Meridian Health, one of the state’s largest health care systems, from acquiring Englewood Health. The judge sided with the Federal Trade Commission, which argued that the merger would raise prices and lower the quality of health care for local residents.
It’s unclear whether the hospital system will press ahead with its plan to acquire Englewood, a 541-bed hospital located just eight miles from the system’s flagship Hackensack University Medical Center, and pull it into its statewide constellation of hospitals.
The Federal Trade Commission’s opposition to the merger, now supported by at least one federal judge, may be an impediment not only to Hackensack Meridian’s plans but to further consolidation in the health care system in New Jersey and elsewhere. At least two deals involving RWJBarnabas Health and other hospitals in the state are in the midst of regulatory review.
President Joe Biden last month ordered the federal government to review policies that thwart competition and lead to higher health care prices, among other things.
Some experts have found that the trend toward hospital consolidation nationwide has led to an increase in prices and decrease in patient satisfaction, as competition is reduced and health systems gain leverage with insurers.
On Friday, Hackensack Meridian and Englewood said they would review U.S. District Court Judge John Michael Vazquez’s opinion and evaluate their options “over the next several days and weeks.
“We were very disappointed in the decision,” a letter from Englewood Health to its employees said. ”The opinion is very unfortunate for the residents that Hackensack Meridian Health and Englewood Health serve.”
Hackensack Meridian can appeal the preliminary injunction, granted Wednesday, or go forward with an administrative trial, scheduled for Oct. 12, on the trade commission’s complaint.
But losing the injunction is very telling,” said John Fanburg, chair of the health law practice at Brach Eichler law firm in Roseland, which is not a party to the litigation. While such injunctions have been overturned in other cases, the next steps in the process will be very challenging, he said. “They would have to think long and hard about to what extent they want to pursue it.”
When the planned acquisition was announced in October 2019, executives at both institutions said it would bring financial stability to Englewood and improve health care in the community.
Hackensack planned to invest $400 million in new operating rooms, expanded cardiac facilities and outpatient sites for Englewood physicians.
Hackensack Meridian also agreed to take on Englewood’s outstanding debt of $182 million.
“Both organizations still firmly believe that this merger is in the best interest of our patients and the community at large,” a statement from the two said this week.
The merger would allow them not only to invest in Englewood’s tertiary care capabilities in cancer care, cardiology, robotics, and maternal and child health, but also expand and support higher-level services provided at Hackensack University Medical Center, the statement said. Care would be more affordable and cost-efficient, it said.
But the trade commission disagreed when it voted unanimously last December to oppose the deal.
With Hackensack Meridian Health controlling three of the six acute-care hospitals in Bergen County, the commission said it “would be able to demand higher rates from insurers … which, in turn, may lead to higher insurance premiums, co-pays, deductibles, or other out-of-pocket costs for plan members.”
“The transaction would also remove the competitive pressures that have driven these hospitals to invest in quality improvements to the benefit of patients,” said Ian Conner, director of the FTC’s Bureau of Competition.
The judge’s opinion was sealed because he said it contained proprietary information.
The union representing Englewood’s nurses said it has “historically supported oversight of mergers. We trust the … Court heard all the evidence and made a fair decision.” Members of Health Professionals and Allied Employees will continue their work as they have throughout the pandemic, said Debbie White, its president.
“Too many hospital mergers lead to jacked up prices and diminished care for patients most in need,” Lindsay Kryzak, the FTC’s director of public affairs, said this week.
“Hospital executives hatching merger plans should take note of the judge’s decision,” she said.