Healthcare Consolidation: RWJBarnabas Health New Merger in New Jersey

sgruber-200 (1)By Sarianne Gruber
Twitter: @subtleimpact

At the start of this month, Robert Wood Johnson Health System and Barnabas Health publicly announced its merger – one that will cover 5 million people or more than half of the state’s population spanning from Ocean County in the south to Hudson County in the north and Somerset in the west.

New Jersey’s Largest Care Provider
“By joining together, we have created the most comprehensive health system in the state, which will enable us to effect the kind of change in the health of our communities that our two separate systems could not do alone”, stated Barry H. Ostrowsky, RWJBarnabas Health’s President and Chief Executive Officer. Ostrowsky, the former Barnabas Health President and CEO will be joined with Robert Wood Johnson Health System and RWJ University Hospital President and CEO Stephen K. Jones, who will serve as Chief Academic Officer in the Office of the President. RWJBarnabas Health now ranks as the most comprehensive health care delivery system in New Jersey, treating over 3 million patients a year. RWJBarnabas Health becomes New Jersey’s second largest private employer of 32,000 employees, 9,000 physicians 1,000 residents with $4.5 billion in annual revenue, creating the most comprehensive health system in the state. In addition, the health systems have contributed a combined total of over $550 million in community benefit services annually. These investments support charity care, food pantries, community gardens, patient education, outreach and engagement programs and programs with schools and religious groups to keep people healthy and promote wellness. Together, RWJBarnabas Health plans to accomplish even more for the communities it serves.

Mega Merges to Meet the Triple Aim
The impetus for the “uberization” of healthcare systems has been the Patient Protection and Affordable Care Act (ACA) of 2010. The law – referred to by many as “Obamacare” has placed financial pressure on hospitals to provide higher quality care, less expensively. Insurers have begun to penalize hospitals for substandard care and reward efficient care. Mergers have become the essential solution for hospitals to stay competitive and reduce costs. RWJBarnabas Health foresees increased benefits from a merger available for both residents and businesses. In addition, increases in the number of patients they serve, with the expectation of generating more revenue. Based in West Orange, RWJBarnabas Health will have 11 acute-care hospitals including the Robert Wood Johnson University Hospital with campuses in New Brunswick and Somerville, located in Central Jersey, as well as dozens of doctor’s offices, laboratories, imaging centers, pharmacies, behavioral health centers, fitness centers and specialty clinics.

The pressures facing healthcare systems promote mergers in order to build efficiency. The challenge to all hospitals today regardless of their size is to achieve the triple aim of lowering the cost of care, meeting quality outcomes and responding to the efficiencies and effectiveness of the organization. The new ACA model rewards hospitals and physicians for keeping their patients healthy in a cost- effective way. The new reimbursement model requires a greater level of organization, integration and electronic-assisted communication than most hospitals can assembly on their own. Hence, these changes in healthcare market place are leading to more and more mergers. Even though health systems are financially strong, it puts pressure on health systems to better manage patient care from primary care physician’s office to rehabilitation center. The new health care systems will be designed not just to treat illness but keep people well.

Physicians as Hospital Employees
In a recent survey, the health care recruiting firm Merritt Hawkins found that more than 90 percent of new doctors “will be employed by hospitals, medical groups, community health centers, academic medical centers, or other facilities.” Fewer than 10 percent of the job placements are in independent settings, such as partnerships or solo practices. A decade ago, 45 percent of new doctors went to work in small or solo practices. The trend, though, is clear. The New Jersey Hospital Association, the state affiliate of the American Hospital Association, reported a 16.5 percent increase from 2008 to 2012 in the number of doctors and dentists employed by hospitals in the Garden State. Nationally, the increase was 20 percent. Reference Guglielmo, W. (2014, October). Team Players: Consolidating Practices. Retrieved from New Jersey Monthly.

Next shift in New Jersey’s hospital landscape is Meridian Health and Hackensack University Health Network. The merger is expected this spring.