What do NJ’s recent hospital mergers mean for patients?
The New Jersey Attorney General’s Office is expected to soon approve a proposed merger that will ultimately create the state's largest hospital chain.
Once approved, the merger will join Barnabas Health and Robert Wood Johnson University Health. The deal will create a healthcare system that will include 11 acute care hospitals, four specialty children’s hospitals and several other facilities.
The proposed plan is part of a continuing trend of hospital mergers that have been taking place for years in the Garden State.
According to Kerry McKean Kelly, the vice president of communications for the New Jersey Hospital Association, one of the goals of healthcare reform is “to provide improved care at less cost, and you can accomplish that by working together in a larger system of healthcare where you can better coordinate care under one umbrella."
She said financial pressures in healthcare today is a major factor that’s driving mergers.
“Being part of a larger system can give a hospital a greater negotiating clout at the bargaining table when they’re negotiating insurance contracts,” she said. “A merger can give a hospital access to something that it needs to improve its operations, it could be more capital to build and modernize, it could be a new service line.”
McKean Kelly said many times when hospital mergers take place, “patients will enjoy easier access to the broader benefits of a larger system, so that could mean individual services in the hospital, it could mean certain specialists. There are many new services that could be brought to the fore as part of a larger system.”
She also said sometimes hospital mergers can increase the flow of research dollars, especially when it involves larger academic medical centers.
“If you bring those together in a larger system of care and they can increase their research capabilities, then I think there’s the potential for them to draw in more grant dollars and research money,” she said.
As to whether hospital mergers save patients money, she said there are differing opinions.
“There would be some that would suggest less competition could lead to increased cost, but others would say that efficiencies and other potential benefits of mergers could help reduce costs,” she said.
According to McKean Kelly, in some instances hospital mergers have saved struggling hospitals that might have been on the verge of closing.
She also noted the merger trend doesn’t mean New Jersey residents won’t be able to get the same individualized care they’re used to.
“You might become a larger organizational structure, but it remains most important to be that local community hospital that’s always available 24/7 focused on patients first,” she said. “(In New Jersey) we still do have a number of hospitals that have remained independent and they are successfully going it alone, so there is no one right way to do this.”
Another merger that was recently approved by the Christie administration will bring together two other hospital systems in the Garden State: shore-based Meridian Health and Raritan Bay Medical Center in Middlesex County. The deal will bring Meridian's coverage farther north, from Monmouth and Ocean counties into Middlesex County.
The NJ Department of Health and the Attorney General's office spent at least eight months reviewing the proposed plan before it was approved. Meridian is also waiting for approval to merge with Hackensack University Medical Center.
According to a recent NJ Advance Media article, many hospitals in the state have scrambled to form merger since the Affordable Care Act was proposed in 2009. Hospital CEOs across the country began considering mergers when fears began to arise about the loss of Medicare funding that was used to fund Obamacare. The law urges healthcare facilities to take emphasis away from costly inpatient services and instead shift the focus to outpatient care and preventative medicine.
In a 2012 report by the Robert Wood Johnson Foundation that analyzed hospital consolidations throughout the country, researchers found that hospital consolidation - at least in some areas of the country - resulted in higher costs to patients. The report also showed that "hospital competition improves quality under an administered pricing system."
Toniann Antonelli contributed to this story.