Appellate court deals another blow to Hackensack Meridian Health, Englewood Health's proposed merger

Hackensack Meridian Health and Englewood Health’s bid to merge faced another setback this week after a U.S. Court of Appeals panel reaffirmed the Federal Trade Commission's (FTC's) opposition to the deal.

A four-judge panel of the U.S. Circuit Court of Appeals for the Third Circuit upheld last year’s U.S. district court decision that granted the FTC a preliminary injunction to block the merger.

In line with the regulator and the lower court, the panel said the proposed merger “is likely to substantially lessen competition” in Bergen County, New Jersey.

In a statement, Hackensack Meridian Health said it was “very disappointed” to learn of the ruling and highlighted the approvals it had previously received from the state’s department of health and attorney general as well as the support it had picked up from the American Hospital Association, the Association of American Medical Colleges and others.

“We firmly believe this merger is in the best interest of our patients and the community at large,” Hackensack Meridian Health said. “At this time, we are weighing the next steps that are in the best interest of the communities we serve.”

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.

Edison, New Jersey-based Hackensack Meridian Health comprises 17 hospitals, staffs more than 36,000 employees and reported $6.9 billion in operating revenue during 2020.

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.

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 over $400 million into Englewood Health to make it a tertiary academic hub for the region.

However, the deal caught the eye of the FTC, which argued in a late 2020 administrative complaint that the merger would eliminate competition in New Jersey’s most populous county, allow the larger system to increase rates and remove incentives to improve quality of care.

The FTC scored a win last August when a U.S. district court granted its preliminary injunction. The health systems filed their appeal later that month.

The regulator’s stance is backed by a coalition of 25 state attorneys general who in November filed an amicus brief urging the appellate court to maintain the injunction. The state prosecutors said at the time that the courts’ decisions were “critical” in preserving antitrust law enforcement of for-profit hospital deals such as these.