Trinity Health will sell three of its hospitals to Cooper University Health Care to form the fourth largest provider in New Jersey, as providers throughout the state continue to consolidate.
Maxis Health, the Trinity Health division that owns Lourdes Health System and St. Francis Medical Center, signed a letter of intent with Camden, N.J.-based Cooper on Thursday to pursue a transaction that will build on their cardiology programs while maintaining the systems' names and missions, executives said.
Camden-based Lourdes and St. Francis in Trenton both focus on caring for low-income urban populations, similar to Cooper, and the merger would expand their reach. Terms of the deal were not disclosed.
"In today's healthcare environment in New Jersey, continuing success for Lourdes and St. Francis depends on being part of a growing regional network with a broad presence in local communities," Ben Carter, executive vice president of Trinity Health, said in a statement. "Cooper's proven commitment to exemplary care, a community-based health focus and service to people who are poor gives us confidence that the mission and communities of Lourdes and St. Francis will remain in good hands as part of a system with these anchor institutions."
Lourdes has two hospitals, several community-based ambulatory care centers and an accountable care organization with more than 200 physicians. St. Francis is a teaching hospital known for its cardiac surgery program. Cooper, which is anchored by a hospital in Camden that features a level 1 trauma center, has a network of more than 100 medical offices and employs more than 630 physicians. The combined entity will serve a population of about 2 million people.
There has been more of these types of regional provider mergers recently and that will likely continue, said Ken Marlow, chair of the healthcare department at the law firm Waller Lansden Dortch & Davis.
"Their shared mission for caring for urban populations is a main driver of the combination, along with the benefits of the scale and scope of having a larger presence and the efficiency that comes with that," he said. "A large part of it is also building out physician networks to provide those services to a larger population."
The announcement comes on the heels of two other mergers among New Jersey providers. RWJBarnabas Health, the state's largest health system with 13 hospitals and annual revenue of $5.1 billion, signed a letter of intent in July to merge with Rutgers and its health group—a faculty practice of about 1,000 Rutgers-employed physicians as well as dentists, psychologists, nurses, pharmacists and other healthcare professionals. The result will be a multispecialty group of more than 2,500 practitioners, creating the New Jersey's largest academic healthcare system, executives said. RWJBarnabas Health also partnered with Children's Hospital of Philadelphia in January to build a network of pediatric facilities. The Children's Hospital has a teaching affiliation with Rutgers, while RWJBarnabas has the Robert Wood Johnson Medical School.
In May, Hackensack Meridian Health and JFK Health signed a definitive agreement to create a combined entity with 15 hospitals throughout New Jersey.
"Mergers that have been the most successful are those that have a shared mission, a focus on quality of care and strong capital investments," Marlow said. "With this combination of health systems and academic medical centers, it will be interesting to see if we see more of these types of partnerships."
Regulators have been reviewing and challenging more of these mergers over the past two years as concerns arise regarding a lack of competition potentially increasing healthcare costs.
"It remains to be seen what effect the new administration will have on the review process and scrutiny these deals receive," Marlow said.