Carrier Clinic And Hackensack Meridian Health Merger

CN Exemption

Since this was a merger between two non-profit hospital entities, the deal avoided the Certificate of Need (CN) process with the NJ DOH. Generally in this type of transaction a letter is sent to the New Jersey DOH to formally ascertain that the merger is exempt because of the non-profit status of both entities.

Hackensack Meridian Health sent a letter to the DOH Division of Certificate of Need and Licensing on August 1, 2018 seeking “confirmation of our analysis of the application of the…regulations to a proposed transaction between Hackensack Meridian Health, Inc. (HMH) and Carrier Clinic, Inc. (Carrier Clinic).” The letter states that because the transaction will not result in a new Medicare provider number for Carrier, nor any purchase or sale of assets, that pursuant to the CN regulations, it should therefore be exempt from the CN process.

John Calabria, then director of the Office of Certificate of Need and Healthcare Facility Licensure, responded on August 14, 2018, concurring with HMH’s assessment of the transaction, exempting the merger from the CN process. HMH responded on August 30, 2018, requesting licensing approval for the transaction between Carrier and HMH.

CHAPA Process

Because this was a merger between two not-for-profit entities, the merger was regulated by the CHAPA process, which requires a review by the NJ Attorney General (AG) and the Commissioner of Health.  The AG must determine if the deal is “in the public interest,” and the Commissioner of Health must determine if the proposed deal “is likely to result in the deterioration of the quality, availability or accessibility of health care services in the affected communities.”

The AG’s office requested responses to 46 questions in the first set of CHAPA questions posed to Carrier and HMH regarding this merger. A second set of questions (#’s 47-55) was sent to Carrier and HMH for clarifying responses, which were submitted to the AG on October 24, 2018.

It was announced on January 3, 2019 that the merger between the two entities had reached final approval.

Definitive Agreement

 The Definitive Agreement is the road map that the two merging parties submit to the AG’s office. It gives details of how the parties will merge and what conditions shall be followed to complete the merger. Frequently there is a timeline of when certain conditions must be met. For this merger some of the conditions include investment in capital improvements, maintenance of services, and an integration plan for bringing Carrier into the HMH system.

For the Carrier-HMH merger, HMH has committed to maintaining the acute behavioral health hospital (the actual Carrier Clinic) for “no less than ten (10) years” after the closing on the transfer. In addition, within the first three years after the closing date, “HMH shall invest $25,000,000 for capital improvements.” Hackensack Meridian will also have “sole and reasonable discretion” as to which services should be added, relocated, or discontinued at the hospital.

The other facilities on the Carrier campus, Blake Recovery Center, East Mountain Youth Lodge, and East Mountain School are promised to be maintained for an initial five-year period after the closing date. A qualifier is noted that if these facilities experience cost increases or funding reductions during this time period, HMH has the sole discretion to discontinue operation.

Carrier Clinic employees and senior management who are not part of a collective bargaining agreement will be retained if in good standing for at least one year. There is no mention of the status for unionized workers.