Virtua Health System and Lourdes (Trinity Health) Hospitals Merger

Both Lourdes hospitals are teaching hospitals, affiliated with Rowan University School of Osteopathic Medicine. The Camden campus has 350 beds and the Burlington campus has 173 beds. After a failed merger transaction between Cooper University Health Care and Trinity that included both Lourdes hospitals as well as St. Francis Hospital in Trenton, Virtua decided to take the two Lourdes hospitals into its network.

CN EXEMPTION

As a merger between two non-profit hospital entities, the deal avoided the Certificate of Need (CN) process with the NJ 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 its non-profit status of both entities. Virtua and Trinity announced the DOH waiver was granted on January 11, 2019.

CHAPA PROCESS

Since 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.”

The New Jersey Attorney General’s office approved the merger for Superior Court review, which happened on June 25, 2019. The merger was finalized on July 1, 2019, after Superior Court approval.

MEMBERSHIP TRANSFER AGREEMENT

Dated June 4, 2018, this document provides the road map for how the merger will take place, what conditions each party must abide, as well as guidelines for financial investment from Virtua to the Lourdes facilities.

The Camden campus is bound to operate under the aegis of its Catholic sponsor until the facility ceases to exist or the Catholic sponsorship is withdrawn. Virtua must “operate the services in a manner consistent with the Ethical and Religious Directives of Catholic Health Care Services as promulgated by the United States Conference of Catholic Bishops.” The Willingboro campus does not have a Catholic sponsor, therefore is not required to conform to the Directives, but it must cease using the Lourdes name upon the closing of transfer of ownership and return all religious articles within three months after closing. It does not state whether Virtua will have the ability to sever the connection with the Catholic sponsor at the Camden hospital if it chooses not to operate under the Catholic Directives.

The Agreement does state that Virtua must maintain the hospitals in the mission of serving the poor and providing charity care. Virtua is obligated by the Agreement to operate the Camden location with the same services for a minimum of 10 years in the current location. The Willingboro location must be maintained with the same services until 2023 or the opening of the new Westhampton location, whichever comes first.

The capital commitment for Virtua is $100 million in the first three to five years after the transfer of ownership with an additional $40 million for the installation of an electronic health record keeping system at the Lourdes’ facilities.

“Substantially” all employees at both Lourdes’ facilities are guaranteed continued employment at their current “at will” status (there is no union representation at either hospital). Service credit and seniority will be given according to the Virtua standard of practice.

The MTA states that the “Buyer intends to commit to developing OLLMC [Our Lady of Lourdes Medical Center] as a destination site for cardiac care.” In response to how the Lourdes System will benefit from the merger, it is stated that one consideration is for the “re-purposing of LMCBC [Lourdes Medical Center of Burlington County] for inpatient behavior health services, including much needed addiction treatment services.” It is unclear if the Willingboro campus will become a behavioral health/addiction treatment center after the new Westhampton acute care hospital opens, or if LMCBC will be a shared facility for acute care and for the treatment center before and after the opening of the new facility.

Other community benefits listed include: “complimentary services between the two health systems that will create a network of clinical services and providers to deliver more care options, greater efficiencies…and convenient access to healthcare providers; anticipated investment in Lourdes System to enhance services and operations and continue care for the communities including for the vulnerable and under-served populations; charity care programs will be retained…including combining outreach programs for greater impact and effectiveness; continuance of ambulatory services to the communities; and creation of community-based health, wellness and educational services.”