Hackensack Meridian Health, Englewood Health appeal district court's merger delay amidst FTC review

Hackensack Meridian Health and Englewood Health have appealed a U.S. district court decision that granted the Federal Trade Commission (FTC) a preliminary injunction halting their proposed merger.

The deal, first announced in late 2019, would place three of Bergen County, New Jersey’s six inpatient general acute care hospitals under the control of the state’s largest healthcare system.

The FTC filed an administrative complaint challenging the merger in December 2020. In it, the regulator argued that the proposed deal would eliminate competition in New Jersey’s most populous county and allow Hackensack Meridian Health to demand higher rates from payers.  

“This acquisition would give the combined hospital system increased bargaining leverage, likely leading to increased prices,” Ian Conner, then-director of the FTC’s Bureau of Competition, said at the time. “The transaction would also remove the competitive pressures that have driven these hospitals to invest in quality improvements to the benefit of patients.”

The court granted the FTC its preliminary injunction on August 4. The hospitals' appeal was filed on August 26, according to court documents.

Englewood Health comprises the 352-bed Englewood Hospital, its physician network and a charitable foundation. The organization staffs nearly 3,800 employees and reported $818.6 million in total revenue during 2020.

Hackensack Meridian Health, based in Edison, New Jersey, was formed in 2016 by the merger of Meridian Health and Hackensack University Medical Center. It comprises 17 hospitals and 340 medical group practices across New Jersey, staffs more than 36,000 employees and reported $6.9 billion in operating revenue during 2020.

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Both nonprofit providers had clinical and academic affiliations in place prior to the deal. At the time of its announcement, Hackensack Meridian Health said it would invest $400 million into Englewood Health to make it a tertiary academic hub for the region.

In a joint statement released following the injunction decision, the systems said they were “very disappointed” to hear of the ruling and noted that their proposed merger had already been approved by the New Jersey Department of Health and the New Jersey Office of the Attorney General.

They also said that the merger is in the best interest of patients and the surrounding communities, as it would allow for more investments into community programs, care coordination across the larger health system, expanded care capabilities and various cost efficiencies.

“Hackensack Meridian Health and Englewood Health will review the judge’s opinion and will evaluate all of their options over the next several days and weeks,” they said in the statement.

U.S. District Judge John Michael Vazquez granted the August 4 preliminary injunction, temporarily preventing the two health systems from consummating the proposed merger. An administrative trial is scheduled to start Oct. 12, according to the FTC.

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“Too many hospital mergers lead to jacked up prices and diminished care for patients most in need,” Lindsay Kryzak, director of the FTC’s Office of Public Affairs, said in a statement. “It remains a mystery why these two hospital systems decided to pursue a highly suspicious merger in the middle of a global pandemic. The court has hit pause on this merger, which the FTC alleges is unlawful. Hospital executives hatching merger plans should take note.”

The preliminary injunction announcement came a day after the FTC warned of “a tidal wave of merger filings” that is delaying its investigations of merger proposals. The regulator said all proposals that have passed statutory deadlines are still considered to be open investigations, and companies moving forward with their mergers “are doing so at their own risk.”

Notably, increased merger and acquisition scrutiny from the FTC and the Department of Justice has picked up substantial support from the White House. Earlier this summer, President Joe Biden issued a sweeping executive order tasking the agencies to take a closer look at healthcare mergers “to ensure patients are not harmed” by increased consolidation across the provider landscape.