Dive Brief:
- Barnabas Health and Robert Wood Johnson Health System have finalized details of their merger, making the new system the largest in the state of NJ. Along with another merger, this combines the majority of hospital care in the state into two systems.
- The new system will operate under the name RWJ Barnabas Health and will include 11 hospitals, annual operating revenue of $4.5 billion and 30,000 employees. The new system will have almost one-third of the central region's market share, according to insurance expert Allan Baumgarten.
- The deal is still pending final approval by the state Attorney General, but is expected to become official sometime in 2016.
Dive Insight:
Also in New Jersey: Hackensack Medical Center and Meridian Health signed a definitive agreement to merge, which would create a combined nine-hospital system that includes more than 23,000 employees and $3.4 billion in revenues.
State 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. Still coming down the pipeline in New Jersey: Geisinger Health System has an agreement to acquire AtlantiCare; Meridian Health has a pending deal to purchase Raritan Bay Medical Center; Atlantic Health System has a pending deal for Hackettstown Regional Medical Center.
As in other states, hospitals in New Jersey have been scrambling to complete mergers, acquisitions and other partnerships over the last several years in order to remain competitive following implementation of the Affordable Care Act. "The new health system will comprise effectively every clinical service... and greatly strengthen our commitment to medical education and research," Barry H. Ostrowsky, president and CEO of Barnabas Health, told NJ.com. "The merger also will provide a large enough geography to be appropriate for the migration to population health management."
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.
Although some insurers and consumer advocates believe many mergers drive up healthcare costs, David Knowlton, president and CEO for the New Jersey Health Care Quality Institute, a research and consumer advocacy group, said he was hopeful that this merger will be used as an opportunity to cut costs. "The payers (insurance companies) and the consumers will have to hold their feet to the fire on that."