RWJ Reportedly in Talks with Barnabas Health About Possible Merger

NEW BRUNSWICK, NJ—Barnabas Health and the Robert Wood Johnson Health System, two of New Jersey's largest hospital networks, are exploring a partnership that would create the largest network in the state, according to NJ.com.

Both CEO’s confirmed the possibility of a merger to a reporter, but declined to elaborate on the details of the collaboration due to “a confidentiality agreement that prevents them from revealing the status or the details of their discussions at this time,” according to the report.

Stepen K. Jones, president and CEO of the Brunswick-based Robert Wood Johnson Health System was quoted in the report: "We are actively in discussions with Barnabas about ways we can increase our service to the community. That's a good thing to do for New Jersey. We think there are great things we can do together."

Barnabas Health manages Clara Maass Medical Center in Belleville, Community Medical Center in Toms River, Jersey City Medical Center, Monmouth Medical Centers in Long Branch and Toms River, Newark Beth Israel Medical Center, Saint Barnabas Medical Center in Livingston, plus two children's hospitals. 

Barry H. Ostrowsky is currently president and CEO of Barnabas Health.

In a statement, Ostrowsky said the organization was frequently in discussions with other healthcare providers to explore and evaluate opportunities for partnerships that would further its mission and support the diverse communities it serves.

Just over a year ago, Jones was installed as chairman of the board of the New Jersey Hospital Association (NJHA). At that time, he noted that 2014 was a “pivotal year” for healthcare.

“I believe that when future generations look back on healthcare’s history, 2014 will stand as a pivotal year as we continue to redesign our system of healthcare to preserve it for years to come and also promote health, wellness and access,” said Jones in a 2014 news release.

Jones spoke of “better integration of hospitals and other healthcare providers,” along with “improved care coordination… and achieving value,” in the 2014 release, setting the stage for another potential merger.

As we reported last June, Robert Wood Johnson University Hospital merged with Somerset Medical Center creating a 965-bed academic medical center with campuses in New Brunswick and Somerville.

The NJHA, a not-for-profit trade organization and advocacy group, provides support and services to NJ’s hospitals and other healthcare providers.

Jones is no longer the CEO of NJHA, as Leslie D. Hirsch, president and CEO of Saint Clare’s Health System, officially succeeded him last week at NJHA’s 96th Annual Meeting, held in Princeton.

According to reports, healthcare networks need to become stronger due to the impact of the Affordable Care Act (ACA), which was signed into law by President Barack Obama in 2010. The ACA included a program known as the Hospital-Acquired Condition Reduction Program.

A hospital-acquired condition (HAC) is an undesirable situation or condition, such as an infection, and troubles a patient while staying in a hospital or medical facility. As a designation used by Medicare/Medicaid in the US for determining reimbursement, hospitals must reduce HAC's to avoid cuts. 

The ACA “relies on Medicare cuts to help pay for the landmark health coverage law,” says the NJ.com report, adding: “[Hospitals] interest in consolidation is also driven by rising health care costs and what they describe as woefully insufficient reimbursement from Medicare, Medicaid and private insurance carriers.” 

Indeed, many hospitals across the nation will lose 1% of their Medicare payments under the new penalty that kicked in on October 1, 2014. 

In the Hub City, both Robert Wood Johnson University Hospital, and Saint Peter's University Hospital are on the list of 23 hospitals in the Garden State facing cuts for their rate of HAC's. 

Profiles for the medical centers that are part of Barnabas Health are available at Medicare.gov.

Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.