Robert Wood Johnson Health Care Corporation and Barnabas Health, Inc.

Barnabas Health, Inc. (Barnabas) was a 501(c)(3) not-for-profit corporation consisting of 24 first level subsidiaries in the corporate tree.  The corporations directly under the parent corporation included Clara Mass Medical Center in Belleville; Community Medical Center in Toms River; Jersey City Medical Center in Jersey City; Monmouth Medical Center with locations in Lakewood and Long Branch; Newark Beth Israel Medical Center in Newark; Saint Barnabas Hospice and Palliative Care Center, Inc.; Saint Barnabas Medical Center in Livingston; Saint Barnabas Outpatient Centers Corp; and Center State Healthcare Corp. Among Barnabas Health’s top tier subsidiaries, there were 21 not-for-profit corporations, one for-profit corporation, and two limited liability companies.

The corporation created by the merger is called RWJ Barnabas Health, Inc.  RWJ Barnabas Health will serve as the parent corporation of RWJ and Barnabas, while the corporate structure under each company will remain the same. The new system is expected to generate an operating revenue of $4.5 billion.[1]

Barnabas CEO and President Barry Ostrowsky will be the initial System CEO for a three-year term, with the RWJ President and CEO taking the position of System Chief Academic Officer to serve as the liaison between Rutgers and RWJ Barnabas Health. Under the new system, the 22-member Board of Trustees will include 10 members appointed by Barnabas, 10 appointed by RWJ, and the President/CEOs of both Barnabas and RWJ.

CN EXEMPTION
Since this was a merger between two non-profit hospital entities, the deal was able to avoid the Certificate of Need (CN) process with the NJ Department of Health (DOH). On July 14, 2015, RWJ and Barnabas entered into a Transaction Agreement to create the new non-profit corporation.  On July 27, 2015, the legal counsel to RWJ Health Care Corp. wrote a letter to the Department of Health requesting exemption from the CN process, confirming their understanding that the transaction did not require the CN process under the proposed terms. Mr. John Calabria, Director of the Division of Certificate of Need and Licensing, responded by letter affirming that under the circumstances the counsel described, the transaction did not require a CN review.

CHAPA PROCESS

RWJ and Barnabas submitted a joint Community Health Care Assets Protection Act (CHAPA) application to the Division of Law Deputy Attorney General Jay Ganzman on September 25, 2015 to initiate a state review of the transaction.  After reviewing the application and obtaining additional information from RWJ and Barnabas, the state approved the merger in March, 2016.[2]

[1] Bergeron, Tom.  “Ostrowsky, Jones describe details of RWJ-Barnabas merger.” NJBIZ, 14 July 2015, http://www.njbiz.com/article/20150714/NJBIZ01/150719891/ostrowsky-jones-describe-details-of-rwjbarnabas-merger

[2] Khemlani, Anjalee.  “It’s Official: RWJBarnabas Health gets final approval,” NJBIZ, 31 March 2016, http://www.njbiz.com/article/20160331/NJBIZ01/160339942/its-official-rwjbarnabas-health-gets-final-approval