FTC sues to block merger between New Jersey health rivals RWJBarnabas Health and St. Peter’s Health System

The Federal Trade Commission has allowed an administrative complaint and lawsuit in federal court to block the acquisition of St. Peter’s Health System by RWJBarnabas Health, or RWJ, one of New Jersey’s largest hospital systems. The complaint alleges that in Middlesex County, in the central part of the state, the acquisition will harm competition for hospital services for general acute care, which represent a wide range of basic medical and surgical diagnostic and treatment services that require a hospital stay at night.

“St. Peter’s University Hospital is less than a mile from the RWJ in New Brunswick, and they are the only two hospitals in the city,” said Holly Vedova, director of the FTC’s Competition Bureau. “There is strong evidence that this acquisition would be bad for patients, as countries will no longer have to compete to provide the lowest prices and the best quality and service.”

The acquisition will give the combined healthcare system a market share of approximately 50 percent for general acute care services in Middlesex County as a whole, which will easily lead to a presumption of harm under antitrust laws, according to the complaint. Headquartered in West Orange, New Jersey, RWJ is a non-profit corporation that manages 12 general acute care hospitals, several outpatient surgical centers, a pediatric rehabilitation hospital, and a stand-alone behavioral health center in New Jersey. Saint Peter’s Healthcare is a non-profit corporation based in New Brunswick, New Jersey that operates an independent hospital that includes a state-designated children’s hospital.

RWJ and St. Peter’s are direct competitors, and both systems routinely identify the other as the most significant competitor in assessing competition and developing a strategy for providing shared emergency care services in Middlesex County. This competition stimulates RWJ and Saint Peter’s to improve the quality, technology, facilities, equipment, access to care and services offered.

Among other things, the complaint alleges that the acquisition would:

  • Eliminate important direct competition between countries. Today, competition between countries benefits both commercial insurers and all RWJ and Saint Peter’s patients, regardless of the insurer;
  • Increase concentration. The acquisition is likely to increase concentration and significantly reduce competition in the market for general emergency care services in Middlesex County; and
  • Leave insurers with less, less attractive alternatives. The only other general emergency hospitals in Middlesex County are outside New Brunswick. A combined healthcare system is likely to require higher levels of reimbursement and / or tougher contractual conditions than today, which will harm consumers

According to the FTC, the entry of other health care providers into general acute care the Middlesex County services market will not be timely, likely or sufficient to counteract the anti-competitive effects of the acquisition.

The Commission voted in favor of filing the administrative complaint and authorizing the staff to seek a temporary restraining order and prior injunction 5-0. An appeal to the federal court and a request for pre-security will be filed U.S. District Court for New Jersey County to suspend the transaction pending administrative proceedings. The administrative process is scheduled for starting on November 29, 2022

A public version of the complaint will be available and linked to this news release as soon as possible.

NOTE: The Commission lodges an administrative complaint when there are “reasons to believe” that the law has been or is being violated and it appears that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of proceedings in which the charges will be considered in a formal hearing before a judge of administrative law.

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