FTC Sues to Block New Jersey Health System Merger

The acquisition would give the combined health system a market share of approximately 50% for general acute care services in Middlesex County, according to the FTC.

Continuing a major crackdown on anticompetitive transactions in the healthcare sector, the Federal Trade Commission (FTC) has taken preliminary steps to block the merger between nonprofit health systems RWJBarnabas Health and Saint Peter's Healthcare System.

According to the complaint, the transaction will "harm competition for inpatient general acute care services" in Middlesex County, New Jersey. The acquisition, according to the FTC, would give the combined health system a market share of approximately 50% for general acute care services in Middlesex County, resulting in antitrust violations, by eliminating competition between the two health systems, increasing concentration, and leaving insurers with fewer and less attractive alternatives.

"Saint Peter's University Hospital is less than one mile away from RWJ in New Brunswick, and they are the only two hospitals in that city," FTC Bureau of Competition Director, Holly Vedova, said in a statement. "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."

Barry H. Ostrowsky, CEO of RWJBarnabas Health, and Leslie D. Hirsch, president and CEO of Saint Peter's released a joint statement Friday morning sharing their disappointment in the FTC's decision to block the systems' vision to create "New Jersey's first premier academic medical center."

"Today, we were notified that the Federal Trade Commission ("FTC") is going to file an administrative complaint and has authorized a suit in federal court to block our proposed transaction that would have enabled us to build the first premier academic medical center in New Jersey to increase services and provide better access to such care for New Jersey residents," the statement said.

"We are incredibly disappointed by these FTC actions against our proposed transaction, which has received full approval from New Jersey’s Attorney General and is supported by grassroots community groups, employer groups, unions, managed care organizations and elected officials at all levels within the State of New Jersey.  We are most disappointed, however, for the people of New Jersey – especially those who reside in our most vulnerable, chronically underserved communities – who will be denied access to the complex care only provided by premier academic medical centers.

"We shall be reviewing the FTC’s complaint, which the State of New Jersey did not join, over the coming days and determine how to best move forward."

Last month, the health systems' shared that their merger plan was approved by the State of New Jersey, a "tremendous milestone in a years-long journey towards fulfilling our shared vision to bring transformative care to New Jersey," Ostrowsky said.

According to a press release, On April 26, in authorizing the transaction under New Jersey's Community Healthcare Assets Protection Act ("CHAPA"), Superior Court Judge Lisa Vignuolo said, "the applicant has met the requirements necessary…[and the transaction between RWJBH and Saint Peter's] will serve in the public interest and the public good resulting in the creation, the hopeful creation and anticipated creation, of the premier New Jersey academic medical center which would benefit the citizens of this state."

The merger has received ongoing support from state officials and payers, including: U.S. Rep. Frank Pallone, Jr. (NJ-06), New Jersey Senate President Nicholas Scutari, New Jersey Assembly Speaker Craig Coughlin, Middlesex County Commission Chair Ronald Rios, New Brunswick Mayor James Cahill, the New Jersey Legislative Latino Caucus, New Jersey Legislative Black Caucus, African American Chamber of Commerce of New Jersey, New Jersey Business & Industry Association, Horizon Blue Cross Blue Shield, and Aetna Better Health.