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RWJBarnabas Health, Saint Peter's Healthcare take first step toward potential partnership

The structure of the relationship has yet to be decided, but will be determined following a due diligence process.

Jeff Lagasse, Associate Editor

While there's nothing yet set in stone, Saint Peter's Healthcare System and RWJBarnabas Health have signed a non-binding letter of intent to explore a potential partnership, likely putting the institutions on a path toward reaching a definitive agreement. That's expected within the coming months.

The announcement follows the request for proposal by Saint Peter's in October 2018 in which it revealed it was considering a strategic partner. Saint Peter's discernment process has involved a comprehensive and detailed analysis of the organization, its Catholic mission, the competitive market and broader industry trends.

WHAT'S THE IMPACT

The letter of intent is the first step in the process of evaluating and designing a new relationship to provide healthcare services for residents in central New Jersey. The structure of the relationship has yet to be decided.

Under the terms of the LOI, the role of Saint Peter's as a full-service provider of acute healthcare services for the greater Middlesex County community would be enhanced. RWJBH would make significant investments in Saint Peter's and expand the network of outpatient services the latter currently provides. Saint Peter's would remain a Catholic institution and continue to abide by the Ethical and Religious Directives for Catholic Health Care Services.

RWJBarnabas Health serves nine counties in New Jersey, covering five million people. The system includes 11 acute care hospitals, three acute care children's hospitals and a pediatric rehabilitation hospital, among other facilities. It also has a partnership with Rutgers University, resulting in New Jersey's largest academic healthcare system.

Saint Peter's University Hospital, a 478-bed acute-care teaching hospital sponsored by the Roman Catholic Diocese of Metuchen, is the flagship of Saint Peter's Healthcare System, which also includes the Children's Hospital at Saint Peter's. Saint Peter's is one of the few independent Catholic hospitals in the country sponsored by a Roman Catholic diocese.

Both parties will now engage in a due diligence process to define the specifics of the relationship.  Approvals will be necessary from state and federal officials, the Catholic Church and others before the transaction is considered complete.

THE LARGER TREND

RJWBarnabas Health has entered into partnerships before, but perhaps none as unique as the one announced in September.

The Advancing Health Equity, founded by the Robert Wood Johnson Foundation, tapped New Jersey's Medicaid agency, Horizon Blue Cross Blue Shield of New Jersey, and RWJBarnabas Health for a two-year model aimed at addressing social determinants of health, with the information they gain generating best practice and policy recommendations for national dissemination.

The two-year collaborative launched in October.

ON THE RECORD

"The rapid consolidation of hospitals in New Jersey and need for greater scale, as well as ongoing changes in healthcare delivery made it vital for us to identify a dynamic and strong strategic partner that would allow Saint Peter's to retain its Catholic mission and identity, remain competitive, and yield the best possible outcome for our patients, employees, medical staff and the communities we serve," said Leslie D. Hirsch, president and CEO of Saint Peter's Healthcare System. "Working in partnership with RWJBarnabas Health would give us an opportunity to enhance the unique strengths of both organizations."

"The rapidly changing healthcare landscape presents new challenges and opportunities," said Barry H. Ostrowsky, president and CEO of RWJBarnabas Health. "Saint Peter's is a vital resource to central New Jersey, and through this agreement we would greatly enhance our commitment in these communities with our mission of improving the health and well-being of its residents. With tremendous support from municipal, county and state elected officials, our Robert Wood Johnson University Hospital academic medical center has enjoyed a longstanding collegial relationship with Saint Peter's, and we are incredibly excited about the many possibilities for enhanced collaboration signaled by this letter of intent."

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com