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Cooper University Health and Cape Regional Health Merger

CORPORATE STRUCTURE

Cooper University Hospital was started in 1887 by prominent Quaker physician Richard M. Cooper and his family. Cooper University Hospital is an academic tertiary-care hospital that is affiliated with Cooper Medical School of Rowan University. It is located in Camden and is the only Level I trauma center in southern New Jersey. Cooper also contains Children’s Regional Hospital, which is a Level II Pediatric Trauma Center. Additionally, MD Anderson Cancer Center of Houston, TX has teamed up with Cooper to provide cancer care.
Cooper has more than 8900 employees, with 1,600 nurses and 850+ physicians. Cooper has 2 urgent care centers and one surgical center, with more than 100 outpatient offices across South Jersey and Pennsylvania.
Cape Regional Health System provides healthcare services to Cape May County through its medical center, three urgent care facilities, physician offices, a cancer center, surgery center, other outpatient facilities. Cape Regional Medical Center is the only hospital in Cape May County. Cape Regional was given the new name of Cooper University Hospital Cape Regional upon completion of the merger.

CN EXEMPTION

Since this is a merger between two non-profit hospital entities, the merger can avoid the Certificate of Need (CN) process with the NJ DOH. The legal counsel to Cooper and Cape Regional will likely write a letter to the Office of Certificate of Need and Healthcare Facility Licensure, confirming their understanding of the law that the Cooper and Cape Regional merger will not be required to undergo the CN process.

CHAPA PROCESS

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.” 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).

LETTER OF INTENT

On December 14, 2022 Cooper University Health and Cape Regional Health announced they had signed a letter of intent to merge. The merger was finalized on 28 May 2024 and went into effect on 1 July 2024.

STRUCTURE OF THE TRANSACTION

According to the Definitive Agreement, the Cape System retained all of its assets and liabilities. At the time of incorporation, in the event they did not have sufficient assets to cover the liabilities, Cooper would pay for those liabilities.

There was no payment in cash or in kind when Cooper became the sole member of the Cape System; rather Cooper committed to spend $6 million a year for five years to the Cape System for various capital expenditures, as well as fund the installation of EPIC clinical and financial electronic information management system.

Cooper also committed to the following:

  • Maintaining the hospital as general acute care hospital, including the emergency department, for a period of five years post-closing;
  • To not implement any service reductions or eliminate any clinical services for four years post-closing without a majority vote of the Cape System Board;
  • Existing medical staff of the Cape System would retain their privileges; and,
  • Cape System employees in good standing would be retained for no less than 1 year and collective bargaining agreements would be honored.