Hackensack Meridian and Englewood Health fight on in favor of hospital merger
Taken from NorthJersey.com
By Lindy Washburn
August 27, 2021
Hackensack Meridian Health has not given up its fight to acquire Englewood Health, despite a federal court order earlier this month.
The health system said on Wednesday that it will challenge in appellate court the Federal Trade Commission’s complaint that the merger would reduce hospital competition and lead to higher costs and lower quality.
“We continue to believe that this merger is in the best interests of the communities we serve and will advance health care in New Jersey,” a statement from Hackensack Meridian said. “The leadership and board of trustees of Hackensack Meridian Health and Englewood Health strongly believe there are grounds for appeal.”
The “notice of appeal” the system filed Wednesday contained a redacted version of the 63-page opinion by U.S. District Judge John Michael Vazquez on Aug. 4, and revealed details of the witnesses and arguments in a case that will shape health care — and help determine which hospitals flourish or flounder — in Bergen County for years to come.
The opinion gave a window, for example, into the tough negotiations that go on between Hackensack Meridian and insurers, which one unidentified insurance executive described as “as close to take it or leave it as I’ve seen in the marketplace without much justification.”
And it revealed that Englewood had embarked on a search for a partner to help modernize its facilities and stabilize its finances in 2018. It focused on five potential partners, whose names were redacted. They were whittled down until, in September 2019, it signed an agreement with Hackensack Meridian.
Among the witnesses who testified during a May hearing and who were mentioned in the redacted decision was Michael Maron, president and chief executive officer of Holy Name Medical Center in Teaneck, a similar hospital in size and services to Englewood that competes with it for patients. He countered arguments from Hackensack Meridian that its flagship Hackensack University Medical Center was often overcrowded and needed to acquire Englewood to be able to transfer some of its patients, according to testimony cited by the judge.
In addition, insurance executives testified that the rates Hackensack charges insurers for general acute-care services are substantially higher than the rates Englewood charges, the opinion said. Hackensack Meridian’s contracts with insurers contain a clause that once it acquires another hospital, the rates it charges insurers for services at that hospital will be the same as the system’s rates.
Previous acquisitions by Hackensack Meridian led to rate hikes at JFK University Medical Center in Edison and Raritan Bay Medical Center in Perth Amboy and Old Bridge, the judge wrote.
Although the health system said it would waive that contract provision for Englewood, the judge gave “little weight” to the promise, which he noted had been made after the trade commission took a stand on the merger.
Vazquez also dismissed the health system’s argument that any cost efficiencies from the merger would lower prices for consumers. “With history as a guide, the Court doubts that any costs savings Hackensack Meridian Health realizes will be passed through to payors,” his opinion said.
Executives from Horizon Blue Cross Blue Shield of New Jersey, Aetna, UnitedHealthcare, AmeriGroup and AmeriHealth New Jersey testified at the weeklong hearing, held virtually in May, but the identities of specific witnesses — and the amount of the gap in charges — were redacted. (A separate court hearing was held Aug. 18 to agree upon redactions to protect proprietary information.)
Englewood currently operates 350 of the 541 beds its license allows. It had a patient census of 222 on the day before Warren Geller, its president and CEO, testified, the judge wrote. Hackensack University Medical Center, eight miles away, has an average occupancy of 90% to 94%. Its parent health system also owns the former Pascack Valley Hospital in Westwood and the former Palisades Medical Center in North Bergen.
Hackensack Meridian and Englewood have argued the merger would allow Hackensack to invest in programs and services that would improve health care for the community.
The judge agreed that patients would benefit from the $405 million in improvements Hackensack agreed to fund for Englewood’s heart center and operating rooms and the purchase of robotic surgery equipment.
Patients would also have better access to specialized cancer care, cardiology, robotics and maternal and child health care at Englewood through the merger, the partners argued. And Hackensack would enhance its tertiary and super-specialized services at the flagship eight miles away — another benefit to patients, the merger partners said.
But the trade commission disagreed when it voted unanimously last December to oppose the deal and seek a temporary injunction. The trade commission had no comment Thursday about the notice to appeal.
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.
Vazquez agreed that a temporary injunction would serve the public interest. If the merger makes sense now, his opinion said, it will make sense when the case is fully adjudicated.
Now a panel of judges of the Third Circuit Court of Appeals in Philadelphia will decide whether to uphold Vazquez’s order.