Dive Brief:
- Two recent big hospital mergers in New Jersey could rival the scale of NYC health systems, reducing patient-referrals to New York hospitals, Crain's New York Business reports.
- The Hackensack University Health Network and Meridian Health merger, still under state and federal review, will create an 11-hospital system with 25,000 employees and 6,000 doctors. The system has combined revenue of $3.4 billion. The Barnabas Health and Robert Wood Johnson Health System merger will include 10 hospitals and would create a combined revenue of $4.5 billion.
- NJ hospital acquisitions and mergers started in earnest in 2002, Crain's reports. The state allows publicly-traded and private equity companies to own hospitals, unlike New York, allowing greater access to capital from large companies or partners.
Dive Insight:
As in many markets nationally, the merger trend in New Jersey is being driven by nonprofit hospitals efforts to increase their market positions and enhance income. "Hospital expenses are often growing faster than revenues," said Lisa Goldstein, associate managing director of Public Finance Group at Moody's Investors Service.
These big medical centers are keeping patients in New Jersey, reducing the patient-referrals to New York hospitals, Crain's writes. "Fewer patients are crossing the river for routine care," said Bruse Vladeck, senior director at Nexera, a for-profit subsidiary of the Greater New York Hosptial Association.
Chalk this up as further evidence that the legalization of for-profits in the New York market might become a reality—state hospital executives are already saying it's "inevitable." Michael Dowling, chief executive of North-Shore-LIJ Health Systems, said recently that it would be "foolish" to assume that New York would continue to exclude for-profit hospitals when nearly every other state allows them.
In the more immediate future, as Crain's notes: If the New Jersey mergers are successful, New York health systems may start looking to acquire hospitals there. Several have already expanded to New Jersey via affiliations—such as Mount Sinai and North Shore-LIJ.