(Story updated at 5:32 p.m. ET)
RWJBarnabas Health and Children's Hospital of Philadelphia have proposed a strategic alliance that would create an improved network of pediatric care serving central and northern New Jersey.
The two health systems signed a letter of intent to affiliate on Thursday. Leaders say the deal would improve access, delivery, quality and efficiency of pediatric health services and create the most comprehensive pediatric health network in the region.
No funds or ownership are exchanged in the proposed deal, which would unite West Orange, N.J.-based RWJBarnabas Health's three children's hospitals with CHOP, which has 535 beds and was the nation's first pediatric hospital. The system said a formal partnership agreement is expected to be finalized in the near future, but didn't say when.
Deals between health systems to collaborate on pediatric care are becoming increasingly common. In Nashville, suburban Chicago and other markets, those partnerships are tightening the market. An affiliation between Temple University Health System in Philadelphia and Tenet Healthcare Corp.'s St. Christopher Hospital for Children led to the elimination of Temple Unviersity Children's Medical Center in 2007.
The deals can entice children's hospitals that want to expand their reach. They also attract general acute-care hospitals, which don't often place pediatrics as high budget priority.
This deal includes cooperation on inpatient, outpatient and ambulatory services. The systems also believe the move will boost physician talent, by better aligning the two organizations with private physicians in the region and faculty physicians at Rutgers University, while also attracting talented pediatric subspecialists from around the nation.
As a part of the deal, CHOP will help RWJBarnabas boost its pediatric capabilities by sharing physicians, best practices and helping assess the region's pediatric needs, said Madeline Bell, CEO of CHOP. Pediatric affiliations make sense because it's unrealistic to expect the average community hospital to invest at the same levels in pediatric that an institution like CHOP has, she said.
“I think it's really difficult to dabble in pediatrics,” Bell said. “In order to provide really comprehensive care, the number of subspecialties you need, specialized equipment, clinical trials for rare diseases – it really requires building scale to do that well.”
But it's also not sustainable for the nation's elite children's hospitals to expect patients to travel vast distances for care, Bell said. So it's up to those institutions to seek out strategic affiliations with larger health systems, especially those with large maternity programs like RWJ Barnabas, she said.
RWJBarnabas delivers nearly 25,000 babies a year, said CEO Barry Ostrowsky, so the need for pediatric services was there. But even with three children's hospitals under its belt, building a system that could match the capabilities of CHOP simply wasn't an option to serve the emergent needs of the region's children.
“That's not only a major undertaking, but it's all but impossible,” Ostrowsky said. “We might be able to in a generation, but replicating CHOP isn't even an aspiration or a dream.”
The affiliation will make transfers to CHOP seamless for patients who need more complex care, but will also bring pediatric subspecialists closer to where children live, Ostrowsky said.
The proposed affiliation comes less than a year after Robert Wood Johnson Health System and Barnabas Health completed their own merger in March 2016 to create what is now known as RWJBarnabas Health. The combined system includes 11 acute-care hospitals, three children's hospitals, a children's rehabilitation hospital and an acute psychiatric hospital.
“I viewed 2016 as the year of integration,” Ostrowsky said. “Starting in 2017, I'm looking at an era of realizing our potential. That's what this is about: we built this system, we integrated…to now start to developing relationships like this one with CHOP, because that will help realize the potential of this organization.”