Deal Collapses For RWJBarnabas Health To Purchase Saint Peter's

NEW BRUNSWICK, NJ — A proposal to have RWJBarnabas Health take over ownership of Saint Peter's University Hospital has now collapsed.

This comes one week after the Federal Trade Commission (FTC) filed a lawsuit to block the proposed merger, saying it would be "bad for patients" and create a healthcare monopoly in Middlesex County.

Saint Peter's announced Tuesday afternoon that the deal has been entirely dissolved. The Catholic hospital said it was "very disappointed."

"After thorough evaluation, Saint Peter's will not move forward with a proposed transaction with RWJBarnabas Health," said Saint Peter's CEO Leslie Hirsch. "The leadership of both organizations mutually made the difficult decision after the FTC recently filed suit to block the deal."

The FTC said had the deal gone through, it would have given RWJBarnabas a monopoly on Middlesex County's healthcare market.

RWJ Barnabas would have had a market share of nearly 50 percent for general acute care services in Middlesex County, "easily resulting in a presumption of harm under the antitrust laws," read the FTC complaint, a copy of which was obtained by Patch.

"Saint Peter's University Hospital is less than one mile away from RWJBarnabas Health in New Brunswick, and they are the only two hospitals in that city," FTC Bureau of Competition Director Holly Vedova said. "There is overwhelming evidence that this acquisition would be bad for patients, because the parties would no longer have to compete to provide the lowest prices and the best quality and service."

Saint Peter's is a much smaller Catholic hospital that largely serves a low-income and undocumented population in the city of New Brunswick.

They were eager to be bought out by the much-larger RWJBarnabas.

In 2018, Saint Peter's put out a request for proposals looking for a buyer; the Catholic hospital said they were "seeking a strategic partner."

"We are very disappointed with this outcome," Hirsch said Tuesday. "We were truly excited about the potential of this opportunity with RWJBarnabas to create a premier academic medical center that would have improved quality and increased access especially to the most vulnerable in the communities we serve."

What's next for Saint Peter's?

"We are now assessing the best way to move forward as we consider potential options to ensure Saint Peter's longstanding Catholic healthcare mission," said the Saint Peter's CEO Tuesday.

RWJBarnabas would have taken over financial operations at Saint Peter's, but Saint Peter's would have remained open, and would have remained a Catholic hospital.

Everyone wants a piece of densely populated Central Jersey's healthcare market: Hackensack Meridian Health is reportedly eager to expand in the area, and Penn Medicine is also a player, having recently taken over operations at Princeton Hospital.

According to the FTC, Saint Peter's and RWJBarnabas Health are direct competitors, and both systems routinely identify the other as their "most significant competitor" when strategizing on providing general acute care services in Middlesex County.

The FTC lawsuit alleges that the acquisition would:

• Eliminate important head-to-head competition between the parties – "Today, the competition between the parties benefits both commercial insurers and all of RWJBarnabas Health's and Saint Peter's patients, regardless of the insurer."
• Increase concentration – "The acquisition would likely increase concentration and substantially lessen competition in the market for general acute care services in Middlesex County."
• Leave insurers with fewer, less attractive alternatives – "The only other general acute care hospitals in Middlesex County are located outside New Brunswick. A combined health system would likely be able to demand higher reimbursement rates and/or more onerous contractual terms than it does today, which will harm consumers."

Prior: Feds Sue To Block NJ Hospital Merger; 'Bad For Patients,' FTC Claims (June 3)

This article contains reporting from Eric Kiefer, Patch staff