Saint Peter's Healthcare System in New Brunswick, New Jersey, and RWJBarnabas Health, headquartered in West Orange, New Jersey, have signed a definitive agreement to integrate the two healthcare systems.
Under the terms of the agreement, Saint Peter's – with its flagship hospital, Saint Peter's University Hospital, a 478-bed acute care teaching hospital and acute care children's hospital – will remain as a full-service provider of acute healthcare services serving New Jersey and the region. It will continue its longstanding mission and identity as a Catholic hospital.
RWJBH has committed to making significant strategic capital investments in facilities, technology and innovation to enhance and expand the clinical services provided at Saint Peter's.
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With the signing of the agreement, the proposed partnership will begin a period of review by various state and federal regulatory agencies. Approval by the Catholic Church will also be required.
WHY THIS MATTERS
Saint Peter's has been looking for a strategic partner. This deal culminates a three-year discernment process that included a request for proposals in October 2018 seeking a partner best suited to help the organization maintain its Catholic mission and identity in an increasingly changing and competitive healthcare market.
The announcement comes less than a year after Saint Peter's and RWJBH signed a letter of intent to explore a strategic partnership.
THE LARGER TREND
The financial strain of the COVID-19 pandemic, payment reimbursement and policy that favors more outpatient care and competition have forced smaller, independent and rural hospitals to consider a merger or partnership.
While larger health systems can often leverage economies of scale and build deep financial reservoirs, smaller, more rural hospitals are dependent on the revenue they collect from procedures and care delivered within their four walls. Ryan Cochran, who leads Nashville-based Waller Law's finance and restructuring practice, has said most rural hospitals were built when the emphasis was on inpatient care.
Larger systems expand their service area and gain clout through integrating other hospitals in their regions. RWJBarnabas Health is a large, comprehensive academic healthcare system in New Jersey, with a service area covering nine counties with five million people. The system includes 11 acute care hospitals.
ON THE RECORD
Leslie D. Hirsch, president and CEO of Saint Peter's Healthcare System, said, "We are truly excited about the potential of this opportunity to integrate with RWJBarnabas Health to create a premier academic medical center of national distinction in which Saint Peter's will share responsibility for leadership and governance."
"RWJBH has a rich history of providing high quality care to the residents of New Jersey – with our Robert Wood Johnson University Hospital campuses in New Brunswick and Somerville, as well as our Rutgers partners at the Cancer Institute of New Jersey and Robert Wood Johnson Medical School, to name but a few – and the inclusion of Saint Peter's will allow us to only build upon this legacy of service," said Barry H. Ostrowsky, president and CEO of RWJBarnabas Health. "When finalized, we will have the necessary foundation for the creation of our state's first and only premier academic medical center."
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