On 4 August 2021, the District Court of New Jersey granted the Federal Trade Commission’s (FTC) motion for preliminary injunction, preventing Hackensack Meridian Health (HMH) and Englewood Healthcare (Englewood) from closing their proposed merger pending an administrative trial before an FTC administrative law judge this fall. The FTC was quick to celebrate the win. In an uncharacteristically fiery press release, FTC Office of Public Affairs Director Lindsay Kryzak sent a warning shot at health system executives considering potential mergers, stating in part: “Too many hospital mergers lead to jacked up prices and diminished care for patients most in need. It remains a mystery why these two hospital systems decided to pursue a highly suspicious merger in the middle of a global pandemic. The Court has hit pause on this merger, which the FTC alleges is unlawful. Hospital executives hatching merger plans should take note.”
Shortly after Judge John Michael Vazquez ruled on the preliminary injunction, HMH and Englewood announced that they would appeal the ruling to the Third Circuit, which ruled against the merging parties in a hospital merger case in 2016. In the meantime, Judge Vasquez’ opinion (unfortunately heavily redacted) provides important insight for health systems considering a merger with a competitor, particularly with respect to deal planning and consultant materials. Here are a few key areas that weighed heavily in the Court’s decision to halt the deal:
Based on the Court’s treatment of the areas discussed above, health systems considering a merger with a competitor should keep in mind the following:
Authored by Bob Leibenluft, Leigh Oliver, and Jonathan Elsasser.
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