Meridian primarily provides healthcare services to a three-county service area in northeast New Jersey. The Raritan Bay takeover will allow it to expand toward Staten Island, directly across the Raritan River from Perth Amboy. “Our neighboring geography will allow us to give residents in those areas more choices for accessing care and tertiary services,” Meridian President John Lloyd said in a release. Staten Islanders can reach New Jersey via several bridges, while traveling to Manhattan still means a ferry ride or a circuitous trip through neighboring Brooklyn.
Meridian's planned merger would ultimately provide a larger population base for its accountable care organization, a care delivery structure in which hospitals are financially rewarded for improving quality and lowering the cost of care. Meridian's ACO is part of the Medicare Shared Savings Program and has been one of the more successful ACOs to date. Meridian saved Medicare $14.9 million since its ACO formed in 2013, and the system has shared in $7.3 million of those savings, according to data recently released from the CMS.
“Meridian feels the ACO structure will continue to help physicians and providers deliver more effective and efficient care,” Meridian Executive Vice President Timothy Nolan said earlier this week.
Raritan Bay had been struggling financially. The hospital lost more than $2.7 million from operations on $226.8 million of total revenue in 2012, according to its latest available figures (PDF). In 2011 and 2012 combined, Raritan Bay's operating loss totaled more than $6 million. Meridian, meanwhile, posted a 4.4% operating margin (PDF) on $1.4 billion of revenue in fiscal year 2013. Its operating margin was 3.9% through the six months ended June 30, 2014 (PDF).
Meridian and Raritan Bay executives expect to sign a definitive agreement by early 2015. The deal will also require state and federal regulatory approval.
Follow Bob Herman on Twitter: @MHbherman
