Another new health giant emerges: Hackensack Meridian Health

Health system would involve 10 hospitals, $3.4 billion in annual revenue

Meridian Health and Hackensack University Health Network are planning a merger that would create New Jersey's largest hospital network.

The new Hackensack Meridian Health would include:

  • Nine hospitals;
  • About 23,400 employees;
  • More than $3.4 billion in annual revenue.

Officials say they expect two more hospitals to join the network at the completion of Meridian's merger with Raritan Bay Medical Center.

Should the deal move forward following a regulatory review—which could take up to four months—it would be the latest major hospital merger across the nation. 

One reason for the growing trend toward consolidation: The Affordable Care Act has pressured institutions' bottom lines by pushing providers toward more coordination and prevention.

Has the ACA triggered a wave of hospital mergers?

"Private insurers and Medicare are putting more emphasis on outcome and quality," says Mark Pauly, a professor of health care management at University of Pennsylvania's The Wharton School. "You can't be good at everything. That's impossible. So it makes sense to ally with other hospitals."

By increasing its buying power through the deal, Hackensack Meridian would have a significant advantage over independent hospitals when negotiating with insurers.

The two organizations have taken further steps to improve community health; for instance, they both offer Medicare Advantage insurance plans that function like an HMO. The combined system will allow them to offer a range of care—from wellness services to post-acute care.

Meridian Health already operates a standalone "health village" consisting of rehab services, outpatient surgery, primary care physician offices, and a fitness center (Diamond, Asbury Park Press, 10/16; CBS New York, 10/16; Layton/Washburn, The Record, 10/16).

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