Englewood Health and Hackensack Meridian Health Merger

CHAPA PROCESS

When two non-profit health systems announce an intention to merge, they must contact the New Jersey Attorney General’s office and begin the Community Health Assets Protection Act (CHAPA) process. This begins with submission of a Letter of Intent, followed with the AG’s office requesting information and documentation including financial statements, fair value appraisals, board meeting minutes, conflict of interest statements from board members and key employees, any consultant reports, and hierarchy charts. Once the AG’s office is satisfied with the information submitted, it will post an announcement for a public hearing, at which members from the community may speak in favor of or against the proposed merger. The AG’s office writes a recommendation, sending it to the Superior Court, which gives the final approval (or denial) based on the AG’s report.

HIGHLIGHTS: DEFINITIVE AGREEMENT

The EH and HMH Definitive Agreement submitted to the Attorney General’s office included in the post-closing covenants a 10-year commitment to maintain EHMC as an acute care facility, including key clinical service lines: cardiology, neurosciences, vascular surgery, oncology, maternal fetal medicine, neonatology, obstetrics and gynecology, orthopedics, behavioral health, and bloodless medicine.

HMH made a substantial financial commitment to EHMC, including: a “bridge loan” that will provide EHMC a line of credit in the amount of $44.5 million; capital investment in Englewood Affiliates of $404.5 million by the eighth anniversary of the closing date; and an additional $5 million in operating funds to EHMC beginning on the third anniversary of the closing date for 7 years thereafter.

The DA states there will be no implementation of reduction of staff for the first year after the closing and recognizes any union contracts. HMH commits to recognizing time of service for eligible employees for participation in HMH benefit plans where the benefit is determined by length of service and seniority.

FTC INVESTIGATION

On December 3, 2020, the FTC announced that it had filed an administrative complaint to block the merger between HMH and Englewood Health, alleging the merger will increase prices and reduce the quality of healthcare. In addition, the FTC  filed a complaint requesting injunctive relief in NJ Federal District Court. The vote by the Commission to issue the administrative complaint and file suit for a preliminary injunction/temporary restraining order was unanimous and bi-partisan, 5-0.

After a May 2021 hearing with U.S. District Judge Michael Vazquez, an opinion was issued on August 4, 2021, granting the preliminary injunction the FTC sought. This means that Englewood and Hackensack Meridian Health must stop any further steps toward merging until a decision is made in the upcoming administrative trial before the FTC in October 2021.

On August 26, 2021, Hackensack Meridian Health and Englewood filed an appeal in the Third Circuit, challenging the opinion made in U.S. District Court. This may cause a delay to the start of the FTC Administrative trial scheduled for October 2021, depending on how quickly the appeal process moves forward.

The U.S. Court of Appeals of the third circuit blocked the merger between Hackensack Meridian Health and Englewood Hospital on March 22, 2022. On April 11, 2022, HMH and Englewood announced they would no longer pursue a merger, so Englewood remains a stand alone hospital.