Two of New Jersey's largest hospital systems-which have a total of 14 hospitals spanning 11 of the state's 21 counties-are joining forces.
Atlantic Health System in Florham Park and Robert Wood Johnson Health System in New Brunswick last week announced a letter of intent to form a single holding company.
The mergerlike alliance is the latest example of one-upmanship in New Jersey's rapidly changing healthcare landscape. It would create the state's largest healthcare organization, rivaling 10-hospital Saint Barnabas Health Care System in Livingston, N.J.
With eight-hospital Robert Wood Johnson and six-hospital Atlantic, the new organization would control 4,301 licensed beds and oversee $1.6 billion in net patient revenues. Each system, however, plans to retain control of its own assets, debts and fund raising.
The agreement was announced June 23 in a joint news release. Spokeswomen for the systems declined to answer questions and said executives would not be giving any interviews on the deal.
Press materials failed to disclose the systems' combined market share and profitability, as well as whether the systems had filed pre-merger notification documents with the Federal Trade Commission.
The flagship facilities of the Robert Wood Johnson and Atlantic systems, respectively, are 398-bed Robert Wood Johnson University Hospital in New Brunswick, and 637-bed Morristown (N.J.) Memorial Hospital.
Robert Wood Johnson University Hospital had 1996 net income of $79.3 million on net patient revenues of $308.7 million, according to the latest available data from HCIA, a Baltimore-based healthcare information company. Morristown Memorial had 1995 net income of $31.7 million on net patient revenues of $287.1 million, HCIA said.
A New Jersey healthcare attorney familiar with the two systems said the deal isn't likely to raise antitrust concerns. He said he believes federal trustbusters would be comfortable with two to four statewide systems. The systems do not own competing hospitals in any one town.
But the jury is out on whether bigger is better. Integrating different cultures and creating real partnerships with physicians will be difficult, the attorney said.
"I think they feel there is a need to at least match the marketing (clout) that (Chairman and CEO Ronald) Del Mauro has created in the Barnabas system," he noted.
The release said the new organization will be governed by a board with representatives from both systems, but it doesn't say who would manage it.
Richard Oths heads Atlantic as president and chief executive officer; Harvey Holzberg is Robert Wood Johnson's president and CEO.
Through their prepared statement, executives said the merger would enable the systems to expand geographic coverage and share services.
Atlantic Health System was formed through the 1996 merger of Morristown Memorial; Overlook Hospital, Summit; and Mountainside Hospital, Montclair. General Hospital Center at Passaic (N.J.) and two affiliates-Newton (N.J.) Memorial Hospital and Bayonne (N.J.) Hospital-joined later.
Robert Wood Johnson Health System includes Robert Wood Johnson University Hospital and Robert Wood Johnson University Hospital at Hamilton (N.J.). Membership agreements are pending with CentraState Health System, Freehold, and Children's Specialized Hospital, Mountainside.
It has four affiliates: Bayshore Community Hospital, Holmdel; Rahway (N.J.) Hospital; Raritan Bay Medical Center, Perth Amboy; and Warren Hospital, Phillipsburg.