FTC sues to block merger between RWJBarnabas Health and Saint Peter's Healthcare System

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In another attempt to halt a healthcare merger, the Federal Trade Commission has sued to block the acquisition of Saint Peter's Healthcare System by RWJBarnabas Health, one of New Jersey's largest hospital systems.

The complaint alleges that in Middlesex County, in the central part of the state, the acquisition would harm competition for inpatient general acute care services, which are a broad range of essential medical and surgical diagnostic and treatment services that require an overnight hospital stay.

It's the second merger the FTC has sued to block this week, as it also is attempting to nix a consolidation between Utah systems HCA Healthcare and Seward Health Care System.

The St. Peter's/RWJ acquisition, the FTC said, would give the combined healthcare system a market share of about 50% for general acute care services in Middlesex County. The suit alleges this would result in a presumption of harm under antitrust laws.

Since RWJ and St. Peter's are direct competitors – with both systems routinely identifying the other as its single most significant competitor when strategizing on providing general acute care services – the FTC claims this competition incentivizes both individual systems to improve care quality and access, as well as technology, service offerings and amenities.

WHAT'S THE IMPACT?

The lawsuit alleges that the acquisition would likely increase market concentration and lessen competition for general acute care services in the county.

That's important, the FTC claimed, because the way things currently stand, the competition between the two systems benefits both commercial insurers and all of the systems' patients, regardless of the insurer.

Consolidation would leave insurers with fewer, less attractive alternatives, the suit claimed. The only other general acute care hospitals in Middlesex County are located outside New Brunswick. A combined health system, the agency said, would likely be able to demand higher reimbursement rates or more onerous contractual terms than it does today, which it said would harm consumers.

According to the FTC, the entry of other health providers into the general acute care services market in Middlesex County would not be timely, likely or sufficient to counteract the anticompetitive effects of the acquisition.

The commission's vote to issue the administrative complaint, and to authorize staff to seek a temporary restraining order and preliminary injunction, was 5-0. 

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 November 29.

THE LARGER TREND: REACTION

In a statement shared with Healthcare Finance News, RWJ CEO Barry Ostrowsky and St. Peter's President and CEO Leslie Hirsch said the proposed transaction would enable the systems to build "the first premier academic medical center in New Jersey." 

This, they said, would increase services and provide better access to care for New Jersey residents.

"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," the statement read.

"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."

The system leaders said they would be reviewing the FTC's complaint over the coming days and then determine how to best move forward.

ON THE RECORD

"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," said FTC Bureau of Competition Director Holly Vedova. "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."
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com