Hackensack, Meridian Merger Yields NJ’s 2nd Largest Hospital System

Carly Sitrin | June 22, 2016 | Health Care
New Hackensack Meridian Health System includes 13 hospitals, extends from Bergen to Ocean counties

Congressman William Pascrell Jr. (center), joined John K. Lloyd (left) and Robert C. Garrett, co-CEOs of the new Hackensack Meridian Health.
Due to its merger with the Meridian Health system of hospitals, Hackensack University Health Network will now become a 13-hospital system from Bergen to Ocean counties and the second largest after RWJ Barnabas Health. The new Hackensack Meridian Health system, as it will be called, employs 28,000 people and continues the growing trend of consolidating hospital groups across the state.

Hackensack Meridian is being led by an unconventional duo of co-CEOs — Robert Garrett, president and CEO of Hackensack University Health Network and John Lloyd, president of Meridian. The two men think the new, more expansive system will revolutionize healthcare in the state.

“Together we will create the highest quality, fullest spectrum of world-class clinical services.” Co-CEO Garrett said. “We’re going to create a whole new state of healthcare in New Jersey and beyond.”

Garrett said that the merger will result in no layoffs, but will find savings through the more than $250 million in its supply-purchasing chain. It will also leave some vacant positions unfilled.

The new system will encompass not just emergency-care hospitals but teaching facilities, nursing homes, assisted-living accommodations, and outpatient offices.

Garrett said he hopes this new merger will be a model for other states as the market trends toward larger hospital systems. He said the national move to join hospitals is a direct response to changes in the Affordable Care Act (ACA).

In 2010, the ACA went into effect seeking to fundamentally alter the healthcare process and insure all U.S. citizens. Under the new rules, quality of service is emphasized. Hospitals are rewarded for improving patients’ health and reducing readmissions, while they can be punished for repeat hospitalizations within 30 days.

Congressman Bill Pascrell said the ACA is looking to end the fee-for-service model (which incentivized more treatments) while hospital network mergers emphasize quality of treatment. “Because of the ACA we have seen a new focus on improving quality and structuring our payment system around it and not the opposite,” Pascrell said.

This led Hackensack (the largest presence in North Jersey) to link up with Meridian (which has major medical centers in Brick and Neptune) and cover patients across the state. The main issue then becomes preventing the “silo effect” in which a patient’s physicians might not be aware of treatments issued by other specialists. Garrett said with improved IT communication efforts, the entire system will be connected and better able to serve patients by carrying their history from doctor to doctor across the network.

While the board members and CEOs of Hackensack Meridian are optimistic about the benefits this merger will have for patients, experts are still uncertain what the results will be.

“I don’t have a knee-jerk reaction,” said Renee Steinhagen, an attorney at New Jersey Appleseed Public Interest Law Center. “It’s not necessarily bad and not necessarily good but I lean more towards thinking it’s good. They’re taking an innovative step away from fee-for-service pricing and moving towards more community hospitals.”

While both Hackensack and Meridian are Horizon Omnia Tier 1 hospitals, each gained something essential in the merger. Hackensack, which originally included four hospitals and a new private medical school in partnership with Seton Hall University, brought a strong academic edge while Meridian’s robust ambulatory services and experience as an integrated network filled in the blanks. Together the system stretches across most of the state and increases Meridian’s already substantial reach.

Some argue, however, that more mergers lead to monopolies that can force higher prices for insurers, which eventually trickle down to the consumer. Garrett said he doesn’t see this happening for Hackensack Meridian. He said costs will remain the same for patients.