Central New Jersey is a big pond, and Saint Peter's Healthcare System is not exactly a big fish.
There are only a handful of single-hospital health systems left in New Jersey, and as a Catholic organization, New Brunswick-based Saint Peter's falls into an even smaller minority.
Competition is intense in Central New Jersey. In New Brunswick, Robert Wood Johnson University Hospital, a member of West Orange, N.J.-based RWJBarnabas Health, is less than one mile away from Saint Peter's University Hospital. Edison, N.J., which is less than five miles from New Brunswick, is home to Hackensack Meridian Health and one of its large hospitals.
"If you look at Saint Peter's, I always refer to us as an island in the middle of an ocean, and the ocean that surrounds us is the combined strength of the state's two largest health systems," Les Hirsch, president and CEO of Saint Peter's Healthcare System, told Becker's. "One must consider: In the context of the market, do you have the ability to remain fully independent or is some kind of strategic partnership or affiliation needed?"
In September 2020, the system opted for the latter option, inking a definitive agreement to merge with RWJBarnabas Health. Under the partnership, Saint Peter's would have retained its heritage as a Catholic hospital, and RWJBH would have made capital investments in the smaller system's facilities, technology and innovation.
"What brought us to the decision that we needed to join a larger system with greater scale was that New Jersey became highly consolidated — more than I ever expected to ever see, especially in our market — to the point where of 71 individual acute care hospitals, only five or six of us now remain independent and are not yet committed to anyone else," Mr. Hirsch said.
Saint Peter's was looking forward to the support offered by RWJBarnabas' scale and resources, Mr. Hirsch said, until the Federal Trade Commission voted unanimously to block the deal. The agency authorized an administrative complaint and filed a suit in federal court, alleging the acquisition would harm competition for inpatient general acute services.
Both health systems mutually agreed not to pursue a legal battle, and the deal was called off in June 2022.
It is not a tale as old as time — yet — but it might be becoming one. Since the start of 2022, at least 21 hospital and health system mergers, acquisitions, joint ventures, affiliations and partnerships have fallen through. Federal and state governments objected to a number of them, raising concerns about monopolies and potential increases in care costs.
"That [cancellation] was the end of a long process that included significant analysis and a great expenditure of time and effort," Mr. Hirsch said. "We immediately pivoted to acknowledge the fact that as much as we thought it was the right thing to do at the time, the FTC saw it differently. After deciding that we were not going to litigate the case with the FTC, we immediately initiated another similar discernment process to re-evaluate our position in the context of the marketplace to determine how best to move forward to secure Saint Peter’s mission for the long term."
Saint Peter's has yet to identify a new partner, but it is doing well in a competitive marketplace, Mr. Hirsch said. Despite the challenges the system faced over the past few years, it has achieved four ratings upgrades and emerged from the pandemic in a stronger position. The system also was early to slim down its leadership structure, allowing it to save millions on executive salaries and benefits.
"My sense is we'll need that [strategic partner] in our future, but at the same time, we don't find ourselves in a desperate position and can evaluate the best path forward in a thoughtful way," Mr. Hirsch said. "We are highly respected, highly thought of, and we're in a position to be a very, very good strategic partner for the right organization."