Hackensack, Englewood hospital merger in jeopardy as feds seek to block deal

The Federal Trade Commission said Thursday that it is seeking to block Hackensack Meridian Health's acquisition of Englewood Health, arguing the merger would eliminate competition and result in higher medical costs for patients. 

The FTC filed an administrative complaint and plans to file a lawsuit in federal court because the merger would allow Hackensack Meridian to demand higher rates from insurers, which could lead to higher premiums, co-pays, deductibles and other costs for patients, the agency said. 

“The transaction would also remove the competitive pressures that have driven these hospitals to invest in quality improvements to the benefit of patients," Ian Conner, Director of the FTC’s Bureau of Competition, said in a statement.

In a joint statement, executives from Hackensack Meridian and Englewood said they would "vigorously defend" the merger in court.

"We continue to firmly believe that this merger is in the best interest of our patients and the communities at large," the statement read. 

The merger agreement announced in October 2019 continued a trend of hospital consolidation and Hackensack University Medical Center's unparalleled growth from a regional hospital to one of the most dominant health care providers in New Jersey.  

One out of three dollars spent on health care in the United States goes to hospital care.

But, until now, rising prices and profit margins for hospitals have attracted less attention from lawmakers and regulators than drug prices, because most people have insurance coverage that limits their out-of-pocket payment. The main effect of increased hospital prices is higher insurance premiums, which are paid by employers and consumers.

Blocking the merger would affect two large local employers and halt plans for major improvements at Englewood.  

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A memo sent to Englewood employees Thursday said the FTC challenge was disappointing and that management pledged to fight it in court.

Hackensack Meridian pledged to invest $400 million in new operating rooms, expanded cardiac facilities and outpatient sites for Englewood physicians. Hackensack Meridian had also agreed to take on Englewood's outstanding debt of $182 million.

Hackensack Meridian operates its flagship hospital in Hackensack and partially owns Pascack Valley Medical Center — both located within 10 miles of Englewood’s hospital.

If the merger goes through, only a dozen of the 71 hospitals in the state would remain independent from larger health systems, including Holy Name Medical Center in Teaneck and Valley Health, owner of The Valley Hospital in Ridgewood.

The FTC voted 5 to 0 to seek a temporary restraining order. The administrative trial is scheduled to begin on June 15, 2021, according to the agency.

The 541-bed Englewood hospital had the second-lowest occupancy rate in Bergen County in 2018 with 37% of its beds occupied, on average. Hackensack had the highest, with 78%, according to data from the state Department of Health.

Englewood's network of 100 ambulatory care sites in six counties would also become part of Hackensack Meridian's network. Many physicians already maintain affiliations at both hospitals.

At the time of the merger announcement, Englewood employed 3,400 and had 1,100 affiliated physicians. No layoffs were expected.

The president of the nurses union at both hospitals said Thursday that she welcomed the "transparency" that would come with the court review.

"This action by the Federal Trade Commission should provide the necessary oversight that this proposed merger requires​ to ensure patients, the community and Englewood workers are not adversely affected," said Debbie White, president of the Health Professionals & Allied Employees union, which represents 800 nurses at Englewood Hospital. 

In its statement Thursday, the two hospitals said the merger would benefit residents in Bergen County and beyond by expanding Englewood's cancer care, cardiology, maternal/child health, and other services and "achieving cost efficiencies and improved affordability of care for patients, payors and our communities."

Staff Writer Lindy Washburn contributed to this article.

Check back for updates to this story.

Scott Fallon covers the environment for NorthJersey.com. To get unlimited access to the latest news about how New Jersey’s environment affects your health and well-being,  please subscribe or activate your digital account today.

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