Experts: Hospital mergers continue to make sense

By Anjalee Khemlani
New Jersey | Jan 5, 2018 at 11:58 am

When JFK Health officially joined Hackensack Meridian Health earlier this week, it was just the latest of many hospital mergers to hit the state in recent years.

The reason?

They still appear to make sense.

Linda Schwimmer, CEO and president of the New Jersey Health Care Quality Institute, said the merger is beneficial for JFK because it gives it a greater opportunity to grow than it would have had on its own.

“It also enables JFK to become part of (HMH) commercial contracts and be part of its larger population health model,” Schwimmer said. “This makes sense for them.  As care continues to move beyond the hospital walls, health systems are looking to integrate their hospitals with their ancillary facilities, including long-term care facilities.”

Schwimmer sees no letup, at least from regulators.

“The Federal Trade Commission signoff is not surprising, given that RWJBH has a strong presence in the same region,” she said. “This is a national trend that will continue and keeps morphing. Now, we see health plans directly aligning with, merging with or purchasing front-line health care providers (example: CVS and Aetna, Optum and physician practices, Horizon and Sanitas Health).”

Ray Fredericks, CEO of JFK, said partnerships like the ones HMH has with IBM Watson and Memorial Sloan Kettering, plus the capital investments that were pledged recently would not have been possible for JFK when it was on its own.

The investments include a $12 million expansion of the cardiac catherization labs, and a new neuroscience tool that will help neurosurgeons by providing 3-D mapping of the brain.

“We could never afford to make those investments ourselves,” Fredericks said. “JFK started as this little 205-bed hospital with just a little over 500 employees, and we’re now a $650 million, very comprehensive medical center, with nearly 5,000 employees. And all of them were so jazzed about what it means to come together with Hackensack Meridian Health.”

The new mega-system covers a contiguous two-thirds of the state’s population between the densely populated northeastern region and southern communities along the Shore, as well as the region in central Jersey.

(READ MORE from ROI-NJ on the health system merger.)

HMH recently moved its headquarters to Iselin, a spot that connects both legacy Hackensack and Meridian coverage areas.

“It’s something (co-CEO) John (Lloyd) and I have talked about for years, and that’s contiguous geography,” HMH co-CEO Robert Garrett said.

The large swath of New Jersey now in the combined entity’s coverage area means greater access to care, he said.

Marketing over the next few months will focus on how patients can access care through the ambulatory sites rather than having to go to one of the hospitals, and the benefits of the various locations for patients and physicians alike, Garrett said.

Lloyd said that, despite the Hackensack Meridian integration still in the works, adding JFK to the mix was not going to be disruptive.

“Our respective leaders have known each other, in some cases, for 30 years,” he said. “That’s huge. The fact that we know each other and know everything we needed to know about JFK because we’ve done joint ventures with them. And the cultures are so similar. In these mergers when you don’t have similar cultures, it can be a disaster.”

Garrett added that, in areas where HMH has not already integrated, such as developing a combined culture, and benefits and compensation programs, adding JFK now, rather than later, makes the process easier.

“We’re excited that this year has started off with the finalization of our merger with JFK,” Garrett said. “JFK went through a very thorough and deliberate process in choosing a partner, we’re certainly honored they chose us.”

Anjalee Khemlani | akhemlani@roi-nj.com | AnjKhem