The transaction received opposition from the FTC, which sued to block the New Jersey health system merger earlier this month.
New Jersey health systems, RWJBarnabas Health and Saint Peter's Healthcare System, have called off their merger plans, the organizations announced Tuesday.
According to separate statements, the systems mutually agreed to end their transaction due to the Federal Trade Commission's (FTC) move to block the merger earlier in June due to alleged anticompetitive behavior.
Barry H. Ostrowsky, CEO of RWJBarnabas and Leslie D. Hirsch, FACHE, president and CEO of Saint Peter's shared their disappointment in calling off the transaction, both of which said was a difficult decision to make.
"We are disappointed in the termination of the proposed transaction, which we believe would have transformed quality, increased access and decreased the overall cost of care for the people of this State through the creation of a premier academic medical center," Ostrowsky said. "Despite the loss of this opportunity, RWJBarnabas Health remains resolute in its commitment to serve the people of New Jersey – especially those who reside in our most vulnerable, chronically underserved communities – and shall continue to do so."
"We are very disappointed with this outcome. However, we are grateful for the strong partnership we've had with the RWJBarnabas leadership," Hirsch said. "We were truly excited about the potential of this opportunity with RWJBarnabas to create a premier academic medical center of national distinction that would have improved quality and increased access especially to the most vulnerable in the communities we serve. We are now assessing the best way to move forward as we consider potential options to ensure Saint Peter’s longstanding Catholic healthcare mission."
According to the complaint filed by the FTC at the beginning of June, the transaction would have harmed the competition for inpatient general acute care services in Middlesex County, New Jersey, and would give the combined health system a market share of approximately 50% for general acute care services in Middlesex County. According to eh FTC, this would result in antitrust violations by eliminating competition between the two health systems, increasing concentration, and leaving insurers with fewer and less attractive alternatives.
"I am glad that rival hospital systems RWJ and Saint Peter's have terminated an anticompetitive merger that would have harmed patients in Middlesex County, New Jersey … the transaction was presumptively unlawful and would have resulted in higher prices and lower quality of care for New Jersey residents," FTC Bureau of Competition director, Holly Vedova, said in a statement.
In addition to blocking the merger between RWJBarnabas and Saint Peter's, the FTC has also sued to block the mergers between HCA Healthcare and Steward Health Care System in Utah, and Lifespan and Care New England Health System in Rhode Island. It's only a matter of time until we learn if the Advocate Aurora and Atrium Health megamerger will pass the FTC's judgment, or if the agency will continue its merger-breaking streak.
"I am proud to say that this is the third time the Commission has filed a complaint to block an anticompetitive hospital merger so far in 2022," Vedova said. "This enforcement action is a reminder that the FTC remains vigilant in enforcing the antitrust laws and will continue to protect healthcare consumers who are faced with unlawful hospital consolidation."
Melanie Blackman is the strategy editor at HealthLeaders, an HCPro brand.