St. Peter’s Healthcare System and RWJBarnabas Health Merger
Merger cancelled effective June 14, 2022 due to FTC complaint
CORPORATE STRUCTURE
St.Peter’s University Hospital originally began in New Brunswick in 1872 in a Victorian home, and has grown at its current location to include: a children’s hospital; a center for ambulatory resources and outpatient surgicenter; a family health center; a GYN center; a sports medicine center; a physician practice office; a cancer center; and a child protection center.
St. Peter’s University Hospital has 478 licensed beds and is a teaching hospital sponsored by the Roman Catholic Diocese of Metuchen. There are over 4600 employees, including doctors and dentists.
RWJBarnabas Health is one of the largest health care systems in New Jersey. It is comprised of 13 acute care hospitals, 4 children’s hospitals, and almost 200 subsidiary locations in the state providing urgent care, outpatient pediatric care, surgical care, rehabilitation and sports medicine, pharmacies, nursing facilities, imaging, laboratories, day care centers, and its medical school. RWJBarnabas has approximately 32,000 employees, 9,000 physicians, and 1,000 residents and interns.
Both health systems are non-profit and therefore subject only to the CHAPA process through the New Jersey Attorney General’s office.
CHAPA PROCESS & FTC INVESTIGATION
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.
Superior Court gave its approval on April 26, 2022 and both parties said they intended to complete the merger on June 10, 2022, despite an ongoing FTC investigation. The FTC had concerns because all the hospitals in New Brunswick would be under the operation of RWJB, effectively eliminating competition within the community. If the merger went into effect before the FTC made a decision, and then the FTC determined the merger was anti-competitive, the FTC had the ability to force RWJB and St. Peter’s to unwind the merger.
On June 2, 2022, the FTC sued to block the merger between the two health systems, citing that the two hospitals in New Brunswick were less than a mile apart and the only two hospitals in the city. A merger between the two would effectively eliminate any competition within the city and also give RWJBarnabas a 50 percent market share of acute care services in Middlesex County. The Commission voted 5-0 to employ a temporary restraining order and preliminary injunction. St. Peter’s and RWJBarnabas announced on June 14, 2022 that they would not pursue the merger further, cancelling the definitive agreement between the two health systems.
HIGHLIGHTS: LETTER OF INTENT
In a four-page Letter of Intent, it was clearly stated that whether St. Peter’s was completely subsumed by RWJB or RWJB became a minority investor, St. Peter’s would remain sponsored by the Roman Catholic Diocese of Metuchen. The letter outlined an exclusivity clause, negotiating the definitive agreement, a confidentiality clause, and due diligence.
The cover letter accompanying the LOI was sent to the AG’s office on October 16, 2020; the Merger Substitution and Merger Agreement were also included. In response, the AG’s office sent the first set of CHAPA questions to St. Peter’s on October 29, 2020, with 57 initial questions.
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Resources
- Impact of Hospital Mergers
- Merger Laws and Regulations
- Merger Glossary
- New Jersey Open Records Act Request Form
- Cooper University Health and Cape Regional Health Merger
- Capital Health System and Trinity Health Saint Francis Medical Center Merger
- Salem Medical Center and Inspira Health Network Merger
- Prospect East Orange General Hospital May Be Purchased By EOH Acquisition Group, LLC
- CentraState Health System and Atlantic Health System Merger
- Einstein Healthcare Network and Jefferson University Hospitals Merger
- Trinitas Health/Trinitas Regional Medical Center and RWJBarnabas Health Merger
- St. Peter’s Healthcare System and RWJBarnabas Health Merger
- Englewood Health and Hackensack Meridian Health Merger
- Virtua Health System and Lourdes (Trinity Health) Hospitals Merger
- Carrier Clinic And Hackensack Meridian Health Merger
- Community Healthcare Associates' Purchase of Memorial Hospital of Salem County
- JFK Health System And Hackensack Meridian Health Merger
- Cooper Health System And Trinity Health Hospitals Merger
- Meadowlands Hospital Medical Center Bought By Real Estate Developer Yan Moshe
- Thomas Jefferson University-Kennedy Health System Merger
- Hackensack University Health Network and Meridian Health Merger
- Saint Michael's Medical Center Bought by Prime Healthcare Services, Inc.
- East Orange Hospital Bought by Prospect Medical Holdings
- Robert Wood Johnson Health Care Corporation and Barnabas Health, Inc.
- RWJ Barnabas Health and Rutgers Proposed Partnership
- Palisades Medical Center and Hackensack University Health Network Merger
- Raritan Bay Medical Centers and Meridian Health Merger
- Hackettstown Regional Medical Center Bought by Atlantic Health System, Inc.
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