Judge rules in favor of Hershey-Pinnacle merger

A U.S. District Court has ruled against the Federal Trade Commission's bid for an injunction to halt a major healthcare merger in Pennsylvania. Judge John E. Jones III ruled in favor of the merger of Pinnacle Health System and Penn State Milton S. Hershey Medical Center, reported PennLive.

“The proposed integration of the Milton S. Hershey Medical Center and PinnacleHealth into Penn State Health cleared a significant legal obstacle today,” stated Hershey and PinnacleHealth in a joint statement. “Following a hearing in District Court in Harrisburg in April, Judge John Jones has denied the FTC's and Pennsylvania Attorney General's request for an injunction to prevent the two health systems from coming together.”

The FTC argued the merging of the Harrisburg region’s two biggest healthcare companies would have potentially created a monopoly on health services, leading to unfair leverage against insurers and patients as well as raising healthcare costs while lowering quality.

However, Hershey and Pinnacle stated that the merger would lead to increasing efficiency in delivering quality care at a lower cost. They also argued the merger is needed to compete with the other major healthcare companies that have also been paring up in the past few weeks.

“This new collaborative and innovative enterprise will bring together a high-performing university medical center and a community health system known for its quality outcomes and patient-focused care. It will provide increased access to a wider range of services and full spectrum of care to patients over a broader geographic base,” stated Hershey and PinnacleHealth. “The new organization will be governed by a 17-member board of directors made up of directors drawn from Penn State University, Milton S. Hershey Medical Center and PinnacleHealth System boards.”

Federal Judge Jones stated “that the FTC failed to meet its burden to show a likelihood of ultimate success on the merits of [its] antitrust claim against the hospitals."

The next step is an FTC hearing set for May 17 to hear full arguments for and against the merger. Like in previous cases, the FTC has walked away from efforts to block mergers when it fails to get a preliminary injunction. Hershey and Pinnacle had stated they would abandon the merger if the injunction were granted.