Capital Health System and Trinity Health Saint Francis Medical Center Merger

CN Exemption and CHAPA Process

As a merger between two not-for-profit systems with no purchase or sale of assets, the deal is exempt from the Certificate of Need (CN) process with the NJ Department of Health (DOH). Generally, in these transactions the system being taken over (in this case, Trinity), sends a letter to the New Jersey DOH to formally ascertain that the merger is exempt because of the non-profit status of both entities.

Because this is a merger between two not-for-profit entities, the merger is regulated by the CHAPA process, which requires a review by the NJ Attorney General (AG) and the Commissioner of Health. The AG must determine if the deal is “in the public interest,” and the Commissioner of Health must determine if the proposed deal “is likely to result in the deterioration of the quality, availability or accessibility of health care services in the affected communities.”

Although the transfer of ownership did not require a CN due to non-profit status of both parties, the planned closure of St. Francis Medical Center outlined in the Membership Transfer Agreement and in the Attorney General’s November 16, 2022 letter to Superior Court Judge Kay Walcott-Henderson did require a Certificate of Need review. The DOH staff project summary report to the State Health Planning Board recommended the Board approve the CN for closure with the following conditions included:

• Capital Health must prioritize the hiring of employees at St. Francis for current new positions needed at Regional Medical Center (RMC) in Trenton
• Capital Health must operate an RMC SED (satellite emergency department) and primary family care/OB/GYN clinics for at least five years
• Capital Health must provide no-charge transportation from St. Francis to RMC from 6am until 9pm each day
• Capital Health must operate a prisoner/forensic unit
• Capital Health must operate 28 adult psychiatric beds
• Capital Health must supply DOH with annual reports for the initial five year period detailing investments it made over the previous year and a list of completed capital projects

The State Health Planning Board met on November 17, 2022, but as yet no decision has been made public.

Membership Transfer Agreement

Filed with the Attorney General’s office in December 2021, the Membership Transfer Agreement outlines the release of St. Francis Medical Center by Trinity to Capital Health. Once Capital Health assumes sole membership, St. Francis will cease to have any identity with the Catholic Church and will no longer be identified as St. Francis Medical Center (new name was not identified in the Agreement).

Trinity or an affiliate will maintain ownership of the land and buildings, with Capital Health leasing the property from them for a fee of $1.00 a year for the first term of an 18-month lease. At this point it seems that Capital Health could either extend the lease for $16,500.00 per month or vacate the premises. It is expected that during the lease term, Capital will wind down services at St. Francis and prepare to vacate the premises. Because Capital Health has a hospital in Trenton and the physical premises of St. Francis need extensive repair and maintenance, Capital Health will transfer all patient services of St. Francis to Capital Health Medical Center.

The following services must be maintained by Capital Health for at least five years: cardiac services including cardiac surgery; behavioral health services; emergency department services; continuation of inmate treatment services per contract with New Jersey Department of Corrections; and continuation of the internal medicine residency program. All these services will be continued at Capital Health’s Trenton hospital after the closure of St. Francis at the end of the lease agreement mentioned above.

The New Jersey Attorney General’s office held a public hearing on September 12, 2022, with an open comment period until September 19, 2022. Once all comments from the public were reviewed, the Attorney General’s office writes a recommendation letter for review by a New Jersey Superior Court judge, who will make a final decision on the merger.

The Attorney General’s office sent a letter on November 16, 2022 to the Honorable Kay Walcott-Henderson of the New Jersey Superior Court. The AG’s office recommended the judge approve the membership transfer, stating that it did not feel that the take-over would negatively or materially affect access to health care for the area’s residents. It noted that due to the structural deficiencies in the St. Francis building, the only real option was to close it and tear the building down. Capital Health’s commitment to keep key services available such as cardiac care, behavioral health, emergency care, prisoner healthcare,  and outpatient centers and the fact that RMC is only two miles from the St. Francis campus lessens any negative impact on the community.

New Jersey Department of Health Commissioner Judith Persichilli approved the Certificate of Need applications for closure of St. Francis as part of this merger and transfer of services to Capital Health in Trenton, stating that:

“Capital Health plans no changes to the care or services currently provided at St. Francis following the relocation of services to Regional Medical Center and will promote access to low-income persons, racial and ethnic minorities, women, disabled persons, the elderly, persons with HIV infections and other persons unable to obtain care.”

On December 16, 2022, it was announced that Judge Walcott-Henderson approved the merger. Beginning on December 21, 2022, St. Francis will only provide emergency room and out-patient services until such time the building will be razed. Commissioner Persichilli also emphasized that her approval was based on Capital Health’s commitment to hire 450 St. Francis staff members.