New Jersey's Atlantic Health System, Saint Peter's Healthcare System plan to merge

New Jersey providers Saint Peter’s Healthcare System and Atlantic Health System have taken the first step toward a merger they said would include “significant investments” in the Catholic system’s service area.

Wednesday, the pair unveiled a signed letter of intent to establish a strategic partnership they hope will yield a definitive agreement to fully integrate “within the coming months.”

The deal would require signoffs from regulators as well as the Catholic Church. In regard to the latter, Saint Peter’s would maintain its Catholic mission and abide by the Ethical and Religious Directives for Catholic Health Care Services, according to the announcement.

“Today is the first step on an exciting path towards a joining of talents between Saint Peter’s and Atlantic Health System that will benefit the health and well-being of the people of New Jersey,” Brian Gragnolati, president and CEO of Atlantic Health System, said in the announcement. “We are thrilled to partner with Saint Peter's to ensure that high quality, affordable and accessible care remains available to all who need it.”

Morristown, New Jersey-based Atlantic Health System is a seven-hospital nonprofit that employs 20,000 people. It services 14 counties and 7.5 million people within the Garden State as well as some in Pennsylvania and the New York metropolitan area. It reported over $3.7 billion in total revenues, gains and other support and a $172.7 million operating income for the calendar year ended Dec. 31, 2022.

New Brunswick-based Saint Peter’s is a 116-year-old Catholic nonprofit headlined by the 478-bed Saint Peter’s University Hospital, which also serves as a children’s hospital, as well as primary and specialty care networks. It reported $590.3 million in total revenue, gains and other support and a $49.8 million operating income in the calendar year ended December 2022.

Saint Peter’s has spent the past several years “engaged in a discernment process … to determine the best course for our long-term future," President and CEO Leslie Hirsch said in Wednesday’s announcement.

“The hospital industry has substantially transformed over the past 10 years, and we remain the only single-hospital health system in Middlesex County and one of the few remaining in New Jersey,” Hirsch continued. “Although Saint Peter’s is stronger today than ever, throughout this journey it has become clear that to assure our future success, we need a strategic partner whose resources, capabilities and values are aligned with our mission. We are very excited about the prospect of becoming a part of Atlantic Health as it has an excellent reputation for being a high-quality healthcare provider and our respective cultures are very well aligned.”

Of note, Saint Peter’s is still fresh off of a shelved deal to merge with West Orange, New Jersey-based RWJBarnabas Health. Following a 2020 definitive agreement to form what they described as New Jersey’s “first premier academic medical center,” in 2022 the Federal Trade Commission put its foot down on the “anticompetitive” plan to merge the city of New Brunswick’s only two hospitals and bring 50% of Middlesex County’s inpatient general acute care services market under a single entity.

This time around, Saint Peter’s and its new dance partner are floating investments to help the Catholic system “continue to evolve as a high-quality, resourceful, and comprehensive healthcare system serving communities throughout central New Jersey.”

They also highlighted collaborative work to create “significant synergies” between the organizations, “including transitioning Saint Peter’s onto Atlantic Health System’s electronic medical record system.”