RWJBarnabas Health has axed its plans to acquire Saint Peter’s Healthcare System following a suit filed by the Federal Trade Commission to block the deal.
Despite approval from the New Jersey attorney general, the FTC said the deal poses harm to patients due to both providers being competitors and located less than a mile from one another. It said that remaining separate entities “incentivizes them to keep prices lower and quality of care higher” and alleges that “overwhelming evidence” shows the deal would decrease healthcare choices and increase prices for patients, reported Healthcare Dive
In a statement, RWJ CEO Barry Ostrowsky said the decision to scrap the deal “was not reached lightly” and that contrary to the FTC’s stance, the healthcare systems believe it would have “transformed quality, increased access and decreased the overall cost of care.”
RWJ runs 12 general acute care hospitals, several ambulatory surgical centers, a pediatric rehabilitation hospital and a freestanding behavioral health center. Saint Peter’s Healthcare has an independent hospital, which includes a state-designated children’s hospital. The two signed the integration deal in 2020, saying it would create the first multicampus premier academic medical center in New Jersey and enhance specialized services.
The FTC filed its suit in early June, saying that combining the two would give them a market share of approximately 50% of the general acute care services in Middlesex County, which would presumably cause harm under antitrust laws. It also said the introduction of other providers into the general acute care services space was not “timely” or “sufficient” to offset the anticompetitive effects of the deal.
The commission unanimously backed issuing an administrative complaint, along with a temporary restraining order and preliminary injunction. A federal judge approved the restraining order.
The FTC has blocked a number of deals in healthcare over the past year, including one between Rhode Island’s two largest providers
. It is attempting to stop another in Utah between Steward Health Care System and HCA Health.
Its actions are in line with President Biden’s crackdown on healthcare consolidation. Last summer, he signed an executive order instructing antitrust regulators to be more careful in evaluating hospital deals and to revise merger guidelines.