St. Peter’s Healthcare System and RWJBarnabas Health Merger - Health Professionals & Allied Employees

St. Peter’s Healthcare System and RWJBarnabas Health Merger

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 say they intend to complete the merger on June 10, 2022, despite an ongoing FTC investigation. The FTC has concerns because all the hospitals in New Brunswick would be under the operation of RWJB, effectively eliminating competition within the community. If the merger goes into effect before the FTC makes a decision, and then the FTC determines the merger is anti-competitive, the FTC could force RWJB and St. Peter’s to unwind the merger.

HIGHLIGHTS: LETTER OF INTENT

In a four-page Letter of Intent, it is clearly stated that whether St. Peter’s is completely subsumed by RWJB or RWJB becomes a minority investor, St. Peter’s will remain sponsored by the Roman Catholic Diocese of Metuchen. The letter outlines an exclusivity clause, negotiating the definitive agreement, a confidentiality clause, and due diligence.

The cover letter accompanying this 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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