Why hospital mergers are the new normal in New Jersey

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Hospital mergers continue to take place in New Jersey at a fast pace.

Recently Barnabas Health and Robert Wood Johnson Health System merged into RWJ Barnabas Health System.

Hackensack University Health Network and Meridian Health joined forces to become Hackensack Meridian.

“We are definitely seeing an increase in hospital mergers in New Jersey. We probably have about 80 percent of the state’s hospitals now part of a multi hospital system,” said Kerry McKean Kelly, vice president of communications for the New Jersey Hospital Association.

She said the trend is being driven by multiple factors, but money is at the heart of it.

Hospitals have faced a lot of funding cuts in recent years and they could be looking at far deeper cuts, depending on what Congress does with replacing the Affordable Care Act.

“Being part of a larger system can put hospitals in a better place to weather those type of cuts,” she said.

Mergers can also help hospitals avoid duplication and be in a better position financially to remain on the cutting edge.

“A merger may give a hospital access to something it wants or needs to improve its operations, so it could be capital to build and modernize, it could be a service line that currently doesn’t have that will provide greater access to people in its community,” she said.

“When it comes to negotiating a contract with an insurance plan, they might be in a better position to negotiate and receive some improved reimbursement rate.”

McKean Kelly said another benefit of mergers is expanded service.

“What you see are hospitals coming together with each other, but also with other types of healthcare providers, like nursing homes and home health agencies, to provide more integrated care,” she said.

“When a hospital system combines with nursing and home health care services and rehab centers it can be more one stop shopping for the consumer. It’s better for the patient and ideally it reduces costs in the long run in healthcare.”

She stressed mergers are almost always beneficial for consumers.

She explained a merger can keep a hospital open in a particular community, where the facility might have been forced to close if it didn’t join forces with another medical facility.

“What patients care about most is access to healthcare ideally in their community, or at least nearby, and mergers are really focused on that,” she said.

“The goal here is making sure there’s access to healthcare, where and when you need it.”
By David Matthau