FTC Sues to Block Merger Between New Jersey Healthcare Rivals RWJBarnabas Health and Saint Peter’s Healthcare System

The Federal Trade Commission authorized an administrative complaint and a suit in federal court to block the acquisition of Saint Peter’s Healthcare System by RWJBarnabas Health, or RWJ, which is one of the largest hospital systems in New Jersey. The complaint alleges that in Middlesex County, in the central part of the state, the acquisition will harm competition for inpatient general acute care services, which are a broad range of essential medical and surgical diagnostic and treatment services that require an overnight hospital stay.

"Saint Peter's University Hospital is less than one mile away from RWJ in New Brunswick, and they are the only two hospitals in that city," said FTC Bureau of Competition Director Holly Vedova. “There is overwhelming evidence that this acquisition would be bad for patients, because the parties would no longer have to compete to provide the lowest prices and the best quality and service.”

The acquisition would give the combined healthcare system a market share of approximately 50 percent for general acute care services in Middlesex County as a whole, easily resulting in a presumption of harm under the antitrust laws, according to the complaint. Headquartered in West Orange, N.J., RWJ is a non-profit corporation that operates 12 general acute care hospitals, several ambulatory surgical centers, a pediatric rehabilitation hospital, and a freestanding behavioral health center in New Jersey. Saint Peter’s Healthcare is a non-profit corporation headquartered in New Brunswick, N.J., that operates an independent hospital, which includes a state-designated children’s hospital.

RWJ and St. Peter’s are direct competitors and both systems routinely identify the other as the most significant competitor when assessing competition and strategizing on providing general acute care services in Middlesex County. This competition incentivizes RWJ and Saint Peter’s to improve quality, technology, amenities, equipment, access to care, and service offerings.

Among other things, the complaint alleges that the acquisition would:

• Eliminate important head-to-head competition between the parties. Today, the competition between the parties benefits both commercial insurers and all of RWJ’s and Saint Peter’s patients, regardless of the insurer;

• Increase concentration. The acquisition would likely increase concentration and substantially lessen competition in the market for general acute care services in Middlesex County; and

• Leave insurers with fewer, less attractive alternatives. The only other general acute care hospitals in Middlesex County are located outside New Brunswick. A combined health system would likely be able to demand higher reimbursement rates and/or more onerous contractual terms than it does today, which will harm consumers

According to the FTC, the entry of other health providers into the general acute care services market in Middlesex County will not be timely, likely, or sufficient to counteract the anticompetitive effects of the acquisition.

The Commission vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 5-0. The federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the District of New Jersey to halt the transaction pending an administrative proceeding. The administrative trial is scheduled to begin on Nov. 29, 2022. 

A public version of the complaint will be available and linked to this news release as soon as possible.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.