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Barnabas Health and Robert Wood Johnson to merge, create New Jersey's biggest system

The deal brings together 11 hospitals, 30,000 employees and 9,000 physicians.

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Barnabas Health and Robert Wood Johnson Health System, two of New Jersey’s largest health systems, are merging into the state’s largest hospital network, in an attempt to scale accountable and population healthcare.

The deal brings together 11 hospitals, 30,000 employees and 9,000 physicians.

“The new health system will comprise effectively every clinical service from primary to quaternary and greatly strengthen our commitment to medical education and research,” said Barry Ostrowsky, president and CEO of the seven hospital Barnabas Health, based in West Orange, New Jersey. “The merger also will provide a large enough geography to be appropriate for the migration to population health management,” said Ostrowsky, who will be the inaugural president and CEO of the new system.

The creation of RWJ Barnabas comes amid a wave of hospital system consolidation nationally and in New Jersey. If approved and completed on schedule next year, RWJF Barnabas will surpass the most recently announced merger, the formation of Hackensack Meridian Health, a $3.4 billion system with 11 hospitals (including two childrens hospitals), 25,000 employees and nearly 6,000 physicians.

[Also: Meridian Health, Hackensack University Health Network to merge]

The Hackensack Meridian deal, signed in May, momentarily eclipsed Barnabas Health’s position as the state’s largest hospital network. The new proposed merger with RWJ raises in the stakes even more in the new healthcare economy, as hospital systems try to succeed in bringing healthcare beyond hospital, as well as high-quality, affordable acute care.  

Barnabas Health dates back to 1865, when the Ladies Society of Saint Barnabas House created the nonsectarian Hospital of Saint Barnabas in Newark, the state’s first hospital and now a 577-bed teaching facility in Livingston in the midst of a $250 million renovation.

In 1996, the nonprofit Barnabas made its first major attempt at integration when it won Federal Trade Commission approval to form a statewide health system with eight hospitals. That same year, Barnabas partnered with the Mount Sinai School of Medicine to run teaching programs at Saint Barnabas and Newark Beth Israel Medical Center. CEO Ronald J. Del Mauro lead the organization from 1996 until 2012, and today the health system is huge regionally and nationally. With $2.9 billion in annual revenue, the Barnabas system delivers 20,000 babies annually, has the state’s only certified burn treatment facility, the state’s only lung transplant program and the 10th busiest heart transplant program.

[Also: Tracking 2015 mergers and acquisitions]

Barnabas and RWJ leaders hope that their cultures will fit and their healthcare offering compliment each other across large swaths of the state.

Robert Wood Johnson Health System has a 965-bed hospital in New Brunswick the serves as the teaching site for the RWJ Medical School, as well as urgent care clinics and a clinically integrated physician network with 700 docs.

“The combined system, with shared cultures and core values, will provide greater opportunity to improve the health and promote wellness of communities throughout the state,” the two organizations said in statement. “Through sharing of resources and best practices, the merger will promote the highest quality health care delivery and also enable greater economies of scale.” 

Going forward for Barnabas, RWJ and other Jersey hospitals trying to align as partners and consolidate, there is there is one uncertainty -- their nonprofit status.

If the recent decision by Morristown to levy property taxes on the Morristown Medical Center takes course, dozens of nonprofit hospitals in the state would have to pay millions in local taxes—a new liability amid national cost pressure and the emphasis of the hospital.

[Also: Atlantic Health loses tax case, spurs worry over nonprofit healthcare]

Twitter: @AnthonyBrino