Princeton HealthCare merger deal with Penn Medicine is finalized

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Barry S. Rabner

By Philip Sean Curran, Staff Writer
Princeton HealthCare System along with its flagship University Medical Center hospital in Plainsboro will become a part of the University of Pennsylvania Health Care System, with officials from both sides approving the deal in recent weeks.
Their joint announcement Monday, that their respective boards had taken that step, is but the latest development in a partnership they had announced during the summer. State and federal regulators, including the attorneys general offices in New Jersey and Pennsylvania and the Federal Trade Commission, still have to sign off in a process that could take as long as a year.
“We’re very optimistic that we’ll get all the approvals that are necessary,” said Princeton HealthCare President and CEO Barry S. Rabner during a conference call with reporters. He will run the Princeton HealthCare System, reporting to Penn authorities.
Princeton HealthCare officials considered 17 possible suitors to merge with, finally concluding Penn was the right fit because “they can help us expand the clinical services that we offer to the community now,” Mr. Rabner said.
“Our number one guiding principle was what is best for the healthcare of our Central New Jersey constituency,” said Kim Pimley, chairwoman of the Princeton HealthCare Board of Trustees. “That had to be first and foremost.”
“We wanted to be part of something that would best serve the community,” she added.
“We’re proud of what we do,” Mr. Rabner said. “The ability to provide more complex care so that folks can get more care close to home is important. And then when folks have clinical needs that even still exceed our ability, the opportunity to easily, efficiently transfer to Penn for that service, we think is a terrific benefit to the community we serve as well.”
There are no layoffs planned, Mr. Rabner said. Princeton HealthCare employs 2,997 people. He talked of wanting to make “investments” to improve access to care in the region, like with ambulatory care.
Penn will absorb the roughly $300 million in debt Princeton HealthCare was carrying. It is the first hospital in New Jersey to become part of Penn Medicine, although the healthcare system of the Ivy League school in Philadelphia already has a presence with other programs in the state.
“We’ve been serving New Jersey for quite a while,” said Ralph W. Muller, CEO of the University of Pennsylvania Health System in pointing to how 30 percent of Penn Medicine’s patients are from New Jersey. “The people from Princeton do see Philadelphia as a place to go for advanced care. So that was very attractive to us as we were looking at the development of this relationship.”
The hospital along Route 1 will be renamed. “The odds are it’ll change,” Mr. Rabner said.
Princeton HealthCare joins a long list of hospitals that are becoming part of larger systems, with Obamacare seen as spurring hospital mergers around the country. But Mr. Rabner said the Affordable Care Act, as the law is also known, had a “very, very little” role in the decision.
“The biggest change that we felt that influenced our thinking really had more to do with changes on the part of commercial payers … and the pressure that they’ve been feeling from employers that have increased the pressure in turn on us to be as efficient and as low-cost as possible,” Mr. Rabner said. “Those were much more drivers for us than any of the activity at the federal level.”
“We have to be prudent about costs. The American healthcare community, whether they’re employers or patients or the government, (is) very much concerned about the cost of healthcare. We’ve done a good job at keeping those costs down year to year,” Mr. Muller said. “Obviously with a new administration coming into Washington in a month or so, we have to be very attentive to the apparent signals that the president-elect has sent.”