Case 2:20-cv-18140-JMV-JBC Document 369-2 Filed 08/25/21 Page 1 of 67 PageID: 61122
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`Not for Publication
`
`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
`
`Civil Action No. 20-18140
`
`OPINION WITH FINDINGS OF
`FACT & CONCLUSIONS OF LAW
`
`FEDERAL TRADE COMMISSION,
`
`Plaintiff,
`
`v.
`HACKENSACK MERIDIAN HEALTH, INC.
`and ENGLEWOOD HEALTHCARE
`FOUNDATION,
`
`Defendants.
`
`John Michael Vazquez, U.S.D.J.
`
`In this hotly contested matter, Plaintiff Federal Trade Commission (“FTC”) seeks to stop
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`Defendant Hackensack Meridian Health, Inc. (“HMH”), the largest health system in New Jersey,
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`from acquiring Defendant Englewood Healthcare Foundation (“Englewood”), an alleged close and
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`local competitor to two of HMH’s medical centers. Presently pending before the Court is the
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`FTC’s motion for a preliminary injunction to prevent HMH and Englewood from consummating
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`their proposed merger until completion of the pending administrative proceedings. D.E. 133. The
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`parties agree to the relevant product market but little else. The relevant product market is a cluster
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`of inpatient general acute care (“GAC”) services sold and provided to commercial insurers and
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`their members.
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`Defendants filed a brief in opposition to the FTC’s motion, D.E. 157, to which the FTC
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`filed a reply, D.E. 228. The parties also filed several motions in limine in advance of the
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`evidentiary hearing, D.E. 246, 248, 260, 264, in addition to proposed findings of fact and
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`conclusions of law, D.E. 320-21, 323-29. The Court reviewed the submissions in support of and
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`

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`opposition to the motions and held a seven-day evidentiary hearing via videoconference. The
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`parties also provided post-hearing submissions, D.E. 320, 324, and the Court heard closing
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`arguments, also via videoconference, on June 2, 2021. For the reasons stated below, the motion
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`for a preliminary injunction is GRANTED.1
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`I.
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`WITNESSES
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`During the evidentiary hearing, the Court heard testimony from the following individuals,
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`in order of appearance:
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` Michael Maron; President & Chief Executive Officer, Holy Name Medical
`Center;
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` Michele Nielsen; Vice President of Network Contracting & New Jersey Market
`Lead, UnitedHealthcare;
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` Lynda A. Grajeda; Director of Contracting for Medicaid & Medicare,
`Amerigroup of New Jersey2;
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` Walter C. Wengel, III; Senior Director for the New Jersey Network, Aetna;
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` Sue Anderson; Principal, The Chartis Group;
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` Kevin Lenahan; Senior Vice President, Chief Administrative Officer, Chief
`Financial Officer, Atlantic Health System;
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` Dr. Leemore Dafny; Plaintiff’s expert in healthcare and antitrust economics3;
`
` Ken Kobylowski; Senior Vice President for Provider Contracting & Network
`Operations, AmeriHealth New Jersey & AmeriHealth Administrators;
`
`1 The Court has considered all submissions, testimony, and exhibits in this matter. To the extent
`the Court does not expressly address an argument raised by the parties, the Court has considered
`it and found that it does not change the Court’s analysis.
`
`2 Ms. Grajeda testified that Amerigroup only offers Medicaid and Medicare plans in New Jersey.
`Tr. at 282:1-4. The FTC, however, expressly excludes Medicare Advantage and managed
`Medicaid insurers from its relevant product market. FTC Br. at 17 n.42. As a result, the Court
`finds little probative value to Ms. Grajeda’s testimony.
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`3 Dr. Dafny also testified as a rebuttal expert.
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`2
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`

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` Ryan Tola; President, New Jersey Division, Doyle Alliance Group;
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` Robert C. Garrett; President & Chief Executive Officer, HMH;
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` Warren Geller; President & Chief Executive Officer, Englewood;
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` Dr. Lawrence Wu; Defendants’ expert in healthcare and antitrust economics;
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` Kristen Strobel; Senior Director of Global Benefits, Becton, Dickinson & Co.;
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` Patrick Young; President of Population Health, HMH;
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` Allen Karp; Executive Vice President of Healthcare Management &
`Transformation, Horizon Blue Cross & Blue Shield of New Jersey;
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` Mark Sparta; President & Chief Hospital Executive, Hackensack University
`Medical Center;
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` Kevin C. “Casey” Nolan; Defendants’ expert in hospital operations, capacity and
`strategic planning;
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` Dr. Gautam Gowrisankaran; Defendants’ expert in the areas of industrial
`organization, economics and econometrics in the healthcare industry;
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` Dr. Stephen Brunnquell; President, Englewood Health Physician Network;
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` Dr. Gregg Meyer; Defendants’ expert in the area of healthcare quality, population
`health and value-based care;
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` Lisa Ahern; Defendants’ expert on cost savings and efficiencies for healthcare
`provider transactions; and
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` Dr. Patrick Romano; Plaintiff’s rebuttal expert on healthcare quality.4
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`4 Plaintiff also sought to qualify Dr. Romano as an expert on capacity issues from the hospital
`operations perspective, including calculations of capacity or steps that a hospital could take to
`relieve capacity issues. Defendants challenged Dr. Romano’s qualification regarding capacity
`issues, outside of the limited scope of how capacity challenges impact the quality of care. D.E.
`264. Dr. Romano is a clinical practitioner. He does not have experience with healthcare system
`capacity constraints from the operational viewpoint. As a result, the Court grants Defendants’
`request to preclude Dr. Romano as an expert on operational capacity issues.
`3
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`

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`II.
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`BACKGROUND, EVIDENCE, and FINDINGS OF FACT
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`Defendants Englewood and HMH both have hospitals in Bergen County, a densely
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`populated county in northern New Jersey. Englewood operates a single hospital, while HMH has
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`two in the county, including one that it owns with a non-party partner.
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`Hospitals provide inpatient and outpatient care. Outpatient care generally refers to a same-
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`day medical service, whereas inpatient care requires an overnight stay. Tr. at 48:11.5 The focus
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`of this case is inpatient care, specifically inpatient GAC services. As to inpatient GAC services,
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`the type of care is divided into four categories: primary, secondary, tertiary, and quaternary care.
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`The categories reflect the level of complexity of care; primary care is the least complex and
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`quaternary care is the most complex. On average, patients need primary and secondary care more
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`frequently than the higher levels of tertiary and quaternary care. Tr. at 49:7-19. For example,
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`delivery of a baby without complications is considered primary care. A C-section, by comparison,
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`reflects secondary care. A baby born with medical complications requiring neonatal treatment
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`receives tertiary care. Tr. at 49:23-9. Quaternary care includes complex procedures such organ
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`transplants and high-end cancer care. Tr. at 73:23-25; 736:15-19. Hospitals that provide only
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`primary and secondary care are often referred to as community hospitals (although some witnesses
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`used community hospital to refer to an entity that also provided limited tertiary services). See,
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`e.g., Tr. at 46:24-47:6.
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`A. Healthcare Providers
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`The following hospitals and healthcare systems are relevant to the Court’s analysis: (1)
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`Englewood; (2) Hackensack University Medical Center; (3) Pascack Valley Medical Center; (4)
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`Holy Name Medical Center; (5) Valley Hospital Medical Center; (6) Bergen New Bridge Medical
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`5 Citations to “Tr.” refer to the transcript from the seven-day evidentiary hearing in this matter.
`4
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`Center; (7) Palisades Medical Center; (8) Mountainside Medical Center; (9) St. Joseph’s Hospital
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`(2 locations); (10) St. Mary’s General Hospital; (11) RWJBarnabas Health; (12) Atlantic Health
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`System; and (13) New York city hospitals, including New York Presbyterian, Hospital for Special
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`Surgery, Mt. Sinai, and Memorial Sloan Kettering.
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`1. Bergen County Hospitals
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`Defendant Englewood is a high-quality, community teaching hospital in Bergen County.
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`Englewood provides primary, secondary, and some tertiary care, including cardiac and cancer
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`surgery programs. Tr. at 845:13-19, 24-25; 845:25-846:3; 865:12-13. Englewood is licensed for
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`531 beds and is currently able to operate 350. Englewood, however, frequently operates under its
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`350-bed capacity. For example, the day before Englewood’s President & Chief Executive Officer
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`Warren Geller testified in this matter, Englewood’s census was just 222 patients. Tr. at 847:20-
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`848:16. As to payor mix, about half of Englewood’s patients use government programs, such
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`Medicare and Medicaid, while the other half have commercial insurance. Tr. at 849:14-18. Of
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`the commercially insured patients, approximately 55% are Bergen County residents. The
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`remaining 45% come from Hudson, Essex, Passaic, and Rockland counties, which all border
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`Bergen County. Tr. at 850:2-6. About half of Englewood’s revenue is generated from patients
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`outside of Bergen County. Tr. at 851:3-5. Englewood’s growth over the last several years has
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`come from counties other than Bergen County. Tr. at 850:11-18.
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`Defendant HMH’s flagship hospital, Hackensack University Medical Center (“HUMC”),
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`is also located in Bergen County, approximately five miles from Englewood. HUMC is licensed
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`for 781 beds and has 711 operational beds. Tr. at 1148:9-13. HUMC is the busiest hospital in
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`New Jersey and more than 50% of HUMC’s commercially insured patients come from outside of
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`Bergen County. Tr. at 735:3-17; 783:10-14. HUMC is HMH’s only hospital that performs
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`5
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`complex tertiary and quaternary care, in addition to primary and secondary care. Tr. at 735:3-17.
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`HUMC is considered an academic medical center. According to Robert C. Garrett, HMH’s
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`President & Chief Executive Officer, this means that in addition to providing complex tertiary and
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`quaternary care, HUMC is focused on academics, research, and innovation. Tr. at 735:6-20.
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`Nevertheless, there is a high overlap in the inpatient GAC services provided by HUMC and
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`Englewood.
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`.
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`HUMC is currently adding a new tower to its hospital complex, which was described as a
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`“modernization project” and was referred to during the hearing as the “Second Street” project. Tr.
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`at 1150:23-1151:6. The Second Street project will (1) replace the currently 40-year-old operating
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`room platform with larger operating rooms that can house equipment and technology used for
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`complex tertiary and quaternary care; (2) convert existing medical-surgical (“med-surg”) beds into
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`private rooms; and (3) add twenty-two new intensive care unit (“ICU”) beds. Tr. at 1151:6-18.
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`HUMC started planning the Second Street project in 2012 and, at the time of the hearing,
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`anticipated that it would be ready for partial occupancy in approximately 18 months. Tr. at
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`1151:21-25.
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`HMH also co-owns, with Ardent Health Services (“Ardent”), Pascack Valley Medical
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`Center (“Pascack Valley”). Tr. at 769:6-9. Pascack Valley is the smallest acute care community
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`hospital in Bergen County, providing primary and secondary care, Tr. at 57:12-19; 768:16-18, but
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`not tertiary care. Tr. at 768:17-18.
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`Holy Name Medical Center (“Holy Name”) is also in Bergen County. Tr. at 44:19-20.
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`Holy Name is a Catholic sponsored community hospital that provides primary and secondary care
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`services. Tr. at 47:2-6. At least 80% of Holy Name’s inpatient admissions come from within
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`Bergen County. Tr. at 52:18-21. Michael Maron, Holy Name’s President & Chief Executive
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`6
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`

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`Officer, believes that this is because people want convenient, consistent care that is readily
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`available. Tr. at 52:25-6. Englewood is approximately five miles northeast of Holy Name, and
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`there is a significant overlap in the geographic range of patients that the two hospitals service. Tr.
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`at 56:5-15. With the exception of Englewood’s tertiary care offerings, the two hospitals offer
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`virtually identical services and are roughly the same size. Tr. at 55:25-56:4; 57:17-18. HUMC is
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`five miles west of Holy Name. Tr. at 57:4-5. Because of the overlap in services and location,
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`Holy Name views Englewood and HUMC as its primary competitors. Tr. at 86:10-23; 87:19-25.
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`Valley Hospital Medical Center (“Valley”) is another hospital in Bergen County. Valley
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`is the second largest hospital in the county, and offers primary, secondary, and limited tertiary
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`care. Tr. at 59:1-3. Valley Hospital is currently located in Ridgewood, New Jersey but is
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`relocating to a new facility about two miles east, in Paramus, New Jersey. Tr. at 88:5-17. Valley’s
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`new location is a modernization project;
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` Tr. at 88:13-14; 89:5-13. The project is nearing completion. The new construction will
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`ultimately take Valley over five years to complete and is estimated to cost more than $750 million.
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`Tr. at 449:13-23. Because of the location, Garrett believes that Valley’s new hospital will make it
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`a stronger competitor in the region. Tr. at 776:20-25.
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`Bergen New Bridge Medical Center (“New Bridge”) is a government-run, county-owned
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`hospital in Bergen County. New Bridge is predominately a long-term care facility for behavioral
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`health but has a small acute care component that largely services its long-term care residents. Tr.
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`at 59:20-60:3. New Bridge has a new management team that is investing in the facility and recently
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`started to accept commercially insured patients. Tr. at 864:2-9.
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`7
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`2. Health Systems
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`As noted, HMH is the largest healthcare system in New Jersey. HMH was formed after
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`Hackensack University Health Network and Meridian Health merged in 2016. Two additional
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`large health systems play a significant role in the northern New Jersey marketplace, although
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`neither has a hospital in Bergen County: RWJBarnabas Health (“RWJBH”) and Atlantic Health
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`System (“Atlantic”). RWJBH has numerous facilities throughout New Jersey, including Saint
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`Barnabas Medical Center, an academic medical center in Essex County. Tr. at 1108:1-8. In 2017
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`and 2018, RWJBH was the market share leader within Bergen, Essex, Hudson, and Passaic
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`Counties. DX3213-019.6 According to Garrett, RWJBH is HMH’s strongest competitor even
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`though RWJBH does not have an inpatient hospital in Bergen County. Tr. at 774:23-12; 777:16-
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`19. Atlantic has five hospitals: Morristown Medical Center and Chilton Medical Center, which
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`are both in Morris County; Overlook Hospital in Union County; Newton Medical Center in Sussex
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`County; and Hackettstown Medical Center in Warren County. Tr. at 434:1-10. Morristown
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`Medical Center is also an academic medical center. Tr. at 1108:9-13. Although Atlantic does not
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`have a hospital in Bergen County, it is affiliated with an urgent care facility in the county through
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`a joint partnership. Tr. at 434:11-13; 436:17-437:7.
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`6 On June 1, 2021, Defendants provided the Court with their list of exhibits that they seek to move
`into evidence. D.E. 332. The FTC provided its list on June 7, 2021, D.E. 340, and Defendants
`provided a supplemental list on June 9, 2021. D.E. 344. The parties also set forth a limited list of
`objections to documents on the exhibit lists. D.E. 331, 332, 344. The Court addresses the
`objections to PX1061, the Optimization Plans, and the Waiver Letters below. Otherwise, the Court
`did not rely on any of the documents for which there remain objections so the objections are moot.
`Those exhibits without objections in D.E. 332, 340 and 344 are admitted into evidence.
`8
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`

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`3. Non-Bergen County Hospitals
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`Turning to facilities outside of Bergen County, Palisades Medical Center (“Palisades”) is
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`in Hudson County, just south of the Bergen County line. Palisades is owned by HMH and provides
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`primary and secondary care. Tr. at 768:16-18; 769:1-3. HMH also co-owns Mountainside Medical
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`Center with Ardent. Tr. at 769:6-9. Mountainside is a community hospital in Essex County that
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`provides primary and secondary care. Tr. at 768:16-18; 769:1-3. St. Joseph’s Hospital and
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`Medical Center is in Paterson, New Jersey and St. Joseph’s Wayne Hospital is in Wayne, New
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`Jersey. Wayne and Paterson are both in Passaic County, and both hospitals are within 10 miles of
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`HUMC. Tr. at 775:17-25. St. Mary’s General Hospital is an additional for-profit hospital in
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`Passaic County. Tr. at 80:24-6.
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`Certain New York City hospitals are also relevant. New York Presbyterian, Hospital for
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`Special Surgery (“HSS”), Mt. Sinai, and Memorial Sloan Kettering (“MSK”) were mentioned most
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`frequently during the hearing. Although no party denies that some New Jersey residents receive
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`primary and secondary care at New York hospitals, the witnesses largely view these hospitals as
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`providing high-end, specialty care (more complex tertiary and quaternary care) to New Jersey
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`residents. Tr. at 73:20-74:5;
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`; 397:1-10. As to outmigration – that is, New Jersey
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`residents seeking medical care at a New York hospital, see, e.g., Tr. at 767:10-11 – less than 30,000
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`New Jersey residents were discharged from a New York hospital in 2018. DX3601-16.
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`New York City hospitals are also establishing a physical presence in New Jersey, which
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`the parties refer to as “front doors.” MSK and HSS, for example, have outpatient facilities in
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`Bergen County, and Mount Sinai has affiliations with Holy Name and Valley. Tr. at 779:20-
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`780:13. Other New Jersey health systems, such as Atlantic, do the same. These outpatient
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`facilities – the front doors – are intended to steer patients requiring inpatient care to an affiliated
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`9
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`hospital. Tr. at 780:14-16; 780:21-25. The parties, however, failed to provide any evidence
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`demonstrating that the outpatient facilities actually materially impact inpatient admissions.7 In
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`fact,
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`, stated that the number of patients that ultimately came to
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` hospital for inpatient
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`care after visiting one of its
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` facilities accounted for
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`of
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` total inpatient admissions over a 1.5-year period.
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`. With respect
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`to the number of patients who were initially treated at the Bergen County
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` facility and
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`received subsequent inpatient or outpatient care at
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` hospital,
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` indicated that the
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`number was
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` to
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` utilization strategy.
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`.
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`The parties also consider physician practice groups to be a driver of inpatient admissions.
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`For example, Geller appeared to attribute Englewood’s overall growth to its expanding physician
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`network, the Englewood Health Physician Network. Englewood’s physician network is “robust,”
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`encompassing over 500 physicians in five different counties. In fact,
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`of Englewood’s revenue
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`comes from its outpatient services. Tr. at 872:4. Moreover, these 500 physicians, who are fully
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`integrated into the Englewood network, funnel care to Englewood’s hospital. Tr. at 852:11-14;
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`853:6-12; 1311:1-10. Dr. Stephen Brunnquell, President of the Englewood Health Physician
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`Network, explained that the physician network is also a “front door” to the hospital. Tr. at 1309:18-
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`1; 1313:4-5.
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`B. Insurance Companies & Plans
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`Private (or commercial) insurance companies play a major role in the United States’
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`healthcare system and are the payors at issue here. Within New Jersey, the four major commercial
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`7 Of course, there could be at least one other rational business reason for establishing outpatient
`facilities without regard to inpatient admissions: they are independently profitable. The parties,
`however, did not address this point, so the Court does not speculate.
`10
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`

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`insurance companies, from largest to smallest, are Horizon Blue Cross & Blue Shield of New
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`Jersey (“Horizon”), UnitedHealthcare (“United”), Aetna, and Cigna. Tr. at 1024:6-10. Within the
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`commercial insurance sphere, each insurance company offers fully insured and employer-
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`sponsored (or self-insured) plans. For a self-insured product, the employer bears the financial
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`responsibility for the medical expenses that are incurred on behalf of its covered employees, and
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`the employer typically pays the insurance company a fee to administer the plan. Tr. at 151:13-22;
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`1104:16-22. For a fully insured plan, the insurance company bears the risk if the medical expenses
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`exceed the premium paid by the employer. Tr. at 151:23-152:5.8
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`Medical providers and facilities contract with insurance companies to be in the plan’s
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`“network.” If a provider goes “out of network,” the provider is no longer a participating provider
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`in that insurance company’s product or plan. Tr. at 1038:14-21. Each insurance company witness
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`spoke to the importance of a network, which includes physicians, other providers, facilities
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`(including hospitals), and other services that are offered to plan users. Each insurance company
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`witness also testified that a network is “an integral component of the products” offered by the
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`company. See, e.g., Tr. at 152:13-25. Of critical importance is a network with a full scope of
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`services and providers that are well-dispersed geographically. See, e.g., Tr. at 153:19-23; 156:19-
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`25; 335:24-336:4 (explaining that Aetna wants a “big network presence” that does not have any
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`“holes”). Individual members, and therefore plan purchasers, also want access to care that is
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`geographically convenient.9 See, e.g., Tr. at 155:9-15. If an insurance company does not provide
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`8 When referring to commercial insurers herein, the Court does not distinguish between fully
`insured and self-insured plans, as the difference is immaterial to the Court’s analysis.
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`9 The Court notes that New Jersey has GeoAccess standards that apply to certain commercial and
`government plans. These standards generally require that an insurance company’s network offers
`the requisite number of providers and facilities within a certain distance, time, and mileage of the
`insured population. Tr. at 330:2-10.
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`11
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`an attractive network, the insurance company will not be able to sell the plan. See, e.g., Tr. at
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`154:16-19.
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`At the same time, healthcare providers and facilities want to be in-network because, among
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`other things, it increases their volume of patients. See, e.g.,
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`. Patrick Young, HMH’s
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`President of Population Health, explained that from HMH’s perspective, it is not a benefit for a
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`provider to go out of network (or become non-participating). Young testified that if HMH went
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`out of network with an insurance company, it would cause a significant financial hit for the
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`organization due to lost revenue, and it would be disruptive to patients and physicians. Tr. at
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`1039:1-1040:4.
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`In New Jersey, insurance companies negotiate with health systems and hospitals on a
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`statewide basis. This means that all of an insurer’s plan members in New Jersey have access to
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`in-network health systems’ facilities and hospitals. At the same time, counties are important
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`considerations for insurers in developing and selling a health plan. Bergen County is an important
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`county because of its population size and affluence. FTC FOF ¶ 19. The relevant insurers have
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`the following number of customers in Bergen County: United has approximately
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`commercial members, Tr. at 161:13-15; Aetna has
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` commercial members, Tr. at 341:9-11;
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`and AmeriHealth has about 15,000 members, Tr. at 678:6-8. All insurers who testified indicated
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`that they could not market a plan to Bergen County residents if the plan did not include a Bergen
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`County hospital.
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`The Court heard a great deal of testimony about HMH’s experience with commercial
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`insurance companies, both from HMH’s view and from the perspective of the insurance
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`companies. HMH negotiates with commercial insurers “as a fully integrated network,” that is, on
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`a system-wide basis. Tr. at 1024:19-25. This means that HMH negotiates for a consistent (or the
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`same) rate increase across all its facilities. The base rate of each facility, however, differs. Tr. at
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`1026:15-22. Accordingly, the actual rate charged by each specific HMH facility is not uniform
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`across HMH’s system although each facility’s percentage rate increases are the same. In addition,
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`the rates HUMC charges insurers for GAC services are substantially higher than the rates that
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`Englewood charges. On an adjusted case-mix basis,
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`.10 DX5001,
`
`¶ 162.
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`The commercial insurance witnesses who testified in this matter largely described their
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`negotiations with HMH as difficult.
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`, from
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` believed that HMH’s position
`
`during
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` last negotiations with HMH in
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` were “as close to take it or leave it as I’ve
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`seen in the marketplace without much justification.”
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` further believed
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`that HMH’s most recent rate increases were
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` than those of other health
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`systems in New Jersey.
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`, explained that after
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`’ discussions for the
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` contract with HMH hit a “stalemate,” the final rates were only
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`agreed to
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`. In
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` years with
`
`
`
` had never seen
`
`negotiations escalate in such a manner.
`
` stated that the ultimate rate was
`
` of what
`
` typically agrees to for similarly situated hospitals.
`
`
`
`From HMH’s perspective, Young stated that HMH never gets everything that it wants
`
`when negotiating with insurance companies and believes that the commercial insurance companies
`
`have significant leverage. Tr. at 1043:22-23; 1048:2-1050:2. Young also indicated that HMH
`
`10 The case-mix index is used to compare the level of care provided at different hospitals and
`facilities. The higher the case-mix index, the higher the overall acuity, or complexity of care,
`provided at the facility. See Tr. at 191:8-15; 397:6-10.
`13
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`

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`never negotiates on a take-it-or-leave-it basis, Tr. at 1043:19-21, but an email provided by the FTC
`
`seems to suggest otherwise. PX1241. In the first paragraph of this email, which was sent by a
`
`HMH employee to
`
` on
`
`, the HMH representative wrote: “
`
`.” Id.
`
`” Id.
`
`In addition to rates, the other sticking point in HMH’s recent negotiations with private
`
`insurers involves language in certain contracts about rates after an HMH acquisition (the
`
`“Acquisition Clause”). The Acquisition Clauses predates HMH and appeared in legacy Meridian’s
`
`contracts with certain commercial insurers. Through the Acquisition Clause, when HMH acquires
`
`an entity, the new facility moves to the same rates as HMH’s similar facilities within a certain time
`
`frame. Tr. at
`
`; 1036:5-14. In other words, once HMH acquires a facility, that
`
`facility can charge insurers more than it used to, pursuant to the Acquisition Clause.
`
`After the FTC filed its opening brief in this matter pointing to the Acquisition Clause, HMH
`
`informed insurers that it was waiving the Acquisition Clause for the Englewood merger. Young
`
`was not aware of
`
`,
`
`,
`
`.
`
`. The Acquisition Clause has had a substantial financial impact on
`
` After
`
`HMH acquired JFK University Medical Center, it cost
`
` more per year; after HMH
`
`acquired Raritan Bay Medical Center, it cost
`
` more per year.
`
` As a result, during the
`
` negotiations,
`
` asked
`
`
`
`.
`
` testified that HMH
`
` The Acquisition Clause was also a major sticking point with
`
`14
`
`

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` negotiations.
`
`, however, had
`
`.
`
`. When HMH
`
`previously acquired the Carrier Clinic, HMH and
`
`could not agree as to whether
`
`. The classification impacted
`
`. As a
`
`result, HMH
`
`
`
`
`
`. Ultimately, HMH’s
`
`acquisition cost
`
`and additional
`
`.
`
`.
`
`Horizon is the largest insurer in New Jersey and provides both commercial and
`
`government-sponsored plans. Horizon’s commercial plans account for approximately 60 % of its
`
`business in New Jersey. Tr. at 1092:8-1093:5. Although numerous insurance companies have had
`
`challenges with HMH, Horizon did not voice the same concerns and supports the proposed merger.
`
`DX1101. In fact, after the HMH and Englewood merger was announced, Allen Karp, Horizon’s
`
`Executive Vice President of Healthcare Management and Transformation, sent Young a letter
`
`indicating that Horizon supported the merger.11 DX1101. Karp did so at the request of HMH. Tr.
`
`at 1133:12-15.
`
`In the letter, Karp explained that the merger allows Englewood to “focus on tertiary care
`
`for residents of Bergen County” and provide Englewood’s patients with access to coordinated
`
`quaternary care within the HMH system. DX1101. Karp also stated that HMH’s ability to expand
`
`11 During the hearing, the FTC emphasized the fact that Horizon, HMH and RWJBH are co-owners
`of Braven Health, a new Medicare Advantage program. Tr. at 1131:12-1132:1; 1069:9-25. These
`entities share
` generated by Braven Health, with
`. Tr. at 1075:20-1076:1; 1131:21-23. This relationship creates an additional financial
`incentive for Horizon to keep patients at HMH’s hospitals. The FTC also emphasized the fact that
`except for HSS, Horizon does not have any direct contracts with New York hospitals. Tr. at
`1131:3-11. Again, this also creates a motive to support the merger that is unique to Horizon.
`Similarly, Defendants emphasized that Atlantic and United formed a competing physicians’
`practice group, which gives both United and Atlantic a motive to oppose the proposed merger.
`The Court ultimately gives the various relationships little weight as the evidence did not adequately
`establish how the insurers’ motives resulted in slanted or biased testimony.
`15
`
`

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`quaternary care would “have the added benefit of keeping care in New Jersey.” Id. Karp does not
`
`believe that the merger would increase HMH’s bargaining leverage with Horizon. Tr. at 1103:16-
`
`24. At the same time,
`
`. Tr. at 1116:19-22. In addition, Karp is not aware what tertiary care will be
`
`provided at Englewood post-merger, or how HMH intends to keep quaternary care patients in New
`
`Jersey after the merger. Tr. at 1128:12-1129:5.
`
`The Court does not give Karp’s letter much weight. It was written at the request of HMH
`
`and while long on superlatives, it is short on supporting information or analysis.
`
`C. The Proposed Merger
`
`In April 2018, Englewood’s Executive Committee and Board’s outside counsel retained a
`
`consultant, The Chartis Group (“Chartis”), to assist with Englewood’s strategic planning. Geller
`
`explained that he
`
`9. Geller continued that Englewood had and has
`
`Tr. at 871:21-25. Englewood also had
`
` Tr. at 871:15-18; 384:6-
`
` but it would be
`
`.
`
`, and wanted an
`
`. Tr. at 872:3-19.
`
`The Court also heard about Englewood’s strategic planning process, which led to the
`
`proposed merger, from Sue Anderson, a Principal at Chartis. Tr. at 383:4-5. Chartis’s work was
`
`divided into two phases; Anderson was highly involved in both. Tr. at 386:17-22.
`
`In Phase I, Chartis looked at whether Englewood could achieve its strategic goals by itself
`
`or whether it needed a “stronger affiliation with another health system.” Tr. at 386:23-387:3.
`
`Chartis presented its Phase I work to the Executive Committee in June 2018. PX2079. Chartis
`
`16
`
`

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`identified Englewood’s key local competitors within Englewood’s primary service area (“PSA”)12:
`
`HMH accounted for 34% of inpatient discharges; Englewood for 15%;
`
`. No other New Jersey hospital in the region had a percentage of discharges
`
`larger than 7%. Tr. at 391:9-392-18; 06:14-16; PX2079-16. In addition, about 8% of patients in
`
`Englewo