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A federal appeals court blocked Hackensack Meridian Health’s proposed acquisition of Englewood Health, bolstering the Federal Trade Commission’s opposition.
A four-judge panel of the U.S. Court of Appeals for the Third Circuit upheld New Jersey federal judge John Vazquez’ ruling that allowed federal regulators to block the proposed transaction between the not-for-profit New Jersey health system and hospital. It’s unclear whether Hackensack will appeal the decision.
The transaction would have consolidated direct competitors by joining three of the six acute-care hospitals in Bergen County, the FTC said in its complaint.
Their combined market share would have boosted Hackensack’s bargaining leverage with insurers, likely leading to higher prices for care, which would mean higher premiums and out-of-pocket costs, regulators said. Combining Englewood’s 531-bed Englewood Hospital with Hackensack University Medical Center and Pascack Valley Medical Center—three facilities located with 10 miles of each other—would’ve also reduced incentives to improve quality, the FTC said.
“We were very disappointed to learn that the U.S. Court of Appeals for the Third Circuit denied our appeal of the U.S. District Court’s preliminary injunction to block the merger between Hackensack Meridian Health and Englewood Health,” 17-hospital Hackensack said in a statement. It said it is weighing its next steps.
“Although this is not the decision we had hoped for, we entered merger planning from a position of strength. Englewood Health continues to thrive and remains strong. The goal of the planned merger had always been to improve healthcare for the communities we serve. This goal has not changed,” Englewood said in a statement.
Most of the acute-care markets in metro areas are highly concentrated, which has prompted federal and state regulators to increase their antitrust oversight. Hackensack University Health Network and Meridian Health, for instance, merged in 2016 to form the largest health system in New Jersey, where it and its peers have been consolidating at a significant clip.
The FTC’s push to block the Hackensack-Englewood deal is the first time the commission has intervened in a New Jersey hospital transaction during the last decade, New Jersey antitrust experts said. Federal regulators largely have sat on the sidelines because of New Jersey’s dense population and proximity to major metro markets in New York and Philadelphia, they said.
In this case, the FTC argued there were not enough offsetting factors to balance the potential anticompetitive effects. Estimated savings stemming from mergers often fall short, research revealed.
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