National battle over hospital mergers focuses on Hackensack and Englewood proposal

Some 23 states have voiced opposition to Englewood Health’s proposed merger with Hackensack Meridian Health, filing court papers in a Federal Trade Commission case to say they’ve seen how hospital consolidation raises health care prices without improving the quality of care.

The proposed merger has attracted national attention as a test case of the federal government’s power to intervene in the increasing consolidation of the hospital market in the United States.

Nine friend-of-court briefs have been filed in the case so far by national trade organizations ranging from the American Hospital Association to Catalyst for Payment Reform, an independent nonprofit that works on behalf of employers and heath care payors to get better value for health spending.

Now even the Pacific territory of Guam has joined a “friend of court” brief filed this week by the attorneys general of California and Pennsylvania on behalf of 23 states and the District of Columbia. It urges the U.S. Court of Appeals for the Third Circuit to uphold a lower court’s decision to block the merger temporarily.

First announced in October 2019, the proposed merger would make Englewood Health the third hospital in Bergen County to be part of Hackensack Meridian Health, one of the state’s largest health care systems, with 17 hospitals and more than 500 ambulatory care sites. The 545-bed Englewood hospital would join the flagship Hackensack University Medical Center, eight miles away, and Hackensack Meridian Health Pascack Valley Medical Center in Westwood, also eight miles away.

Executives of both said the deal would bring financial stability to Englewood and improve care for the community, in part by Hackensack’s planned $400 million investment in new operating rooms, cardiac facilities and out-patient offices as well as Hackensack’s absorption of Englewood’s $182 million debt.

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But the Federal Trade Commission argued that the deal would create a monopoly in Bergen County and drive up hospital prices.

The latest brief in the case, from a coalition of states, says that such mergers “lead to increased health care costs in local communities and raise the overall cost of health care.”

“In California, we’ve seen firsthand the effects of a large nonprofit health care system’s anticompetitive practices,” California Attorney General Rob Bonta said in announcing the multi-state initiative.

“Ensuring that there is strong competition in the health care system helps keep prices down and still provides patients with quality care,” said Pennsylvania Attorney General Josh Shapiro.

The coalition’s brief said the wave of hospital consolidation across the country has resulted in large health care systems gaining bargaining power in negotiations with insurers, resulting “in higher prices without any substantial improvements in quality for consumers.”

Joining Bonta and Shapiro were attorneys general from Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, Virginia, Washington, Wisconsin, the District of Columbia and Guam.

President Joe Biden ordered the federal government, early in his term, to review policies that thwarted competition, to better serve consumers and keep prices in check.

Last month, the American Hospital Association and the Association of American Medical Colleges also filed friend of court briefs. They argued that hospital mergers benefit patients by lowering operating expenses at the acquired hospital and improving patient outcomes through access to better data and higher-level services.

New Jersey’s attorney general and the state commissioner of health have already reviewed the proposed deal, and a Bergen County Superior Court judge approved it.

But in December, the FTC challenged the plan in federal court. In an administrative complaint, the FTC said the transaction would eliminate competition between Hackensack and Englewood and enable Hackensack Meridian to demand higher prices from insurers. That could lead to higher premiums for insurance plan members.

The merger would also remove competitive pressures that drove the hospitals to invest in improvements that benefited patients, the FTC argued.

District Court Judge John Michael Vazquez sided with the FTC and in August granted an injunction that temporarily halted the deal. Hackensack Meridian and Englewood appealed the judge’s injunction in September.

It is not clear when the Third U.S. Circuit Court of Appeals will decide the merger partners' appeal.

Lindy Washburn is a senior health care reporter for NorthJersey.com. To keep up-to-date about how changes in health care affect you and your family, please subscribe or activate your digital account today.

Email: washburn@northjersey.com

Twitter: @lindywa

This article originally appeared on NorthJersey.com: Hackensack-Englewood hospital merger: FTC and 23 states oppose