Feds Sue To Block NJ Hospital Merger; ‘Bad For Patients,’ FTC Claims

NEW JERSEY — Federal officials have filed a lawsuit to block a proposed merger between RWJBarnabas Health, one of the largest hospital systems in New Jersey, and Saint Peter’s Healthcare.

The Federal Trade Commission (FTC) announced Thursday that it has authorized an administrative complaint and a suit in federal court to block the acquisition, claiming that it would be “bad for patients” in Middlesex County.

RWJBarnabas Health, which has a headquarters in West Orange, operates 12 general acute care hospitals, several ambulatory surgical centers, a pediatric rehabilitation hospital, and a freestanding behavioral health center in New Jersey.

Saint Peter’s Healthcare is a nonprofit corporation headquartered in New Brunswick. It operates an independent hospital, which includes a state-designated children’s hospital.

The acquisition would give the combined health care entity 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,” according to the FTC complaint.

“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,” Vedova said.

According to the FTC, St. 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 complaint 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.”

RWJBarnabas Health announced the plan to merge with Saint Peter’s in September 2020. It would essentially take over financial operations at Saint Peter's, but Saint Peter's would still remain fully open, and would stay a Catholic hospital, administrators said.

Whether Saint Peter's will keep its name remains to be seen, and will be discussed later as per the terms of the agreement, a hospital spokeswoman said at the time. However, she emphasized that the plan was to create an integration of the two health care systems, and added that Saint Peter's doctors and level of care – as well as its strong Catholic identity – will remain.

• See related article: RWJ And Saint Peter's Hospital Announce Merger

Central Jersey’s health care market has seen increased interest in recent years. 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.

However, the FTC complaint alleges that the entry of other health providers into the general acute care services market in Middlesex County will not be “timely, likely, or sufficient to counteract the anticompetitive effects of the acquisition.”

The federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the District of New Jersey to halt the transaction pending an administrative proceeding. The administrative trial is scheduled to begin on Nov. 29.

This article contains reporting from Carly Baldwin, Patch staff

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