Advocate, NorthShore scrap merger plans

A merger between two Illinois hospital systems, Advocate Health Care and NorthShore University Health Care, has been called off after a federal judge granted the Federal Trade Commission (FTC) a preliminary injunction against the deal.

Advocate, the largest hospital system in the state, sought to create the largest integrated care network in Illinois and 11^th largest nonprofit system in the U.S. by merging with the four-hospital NorthShore. The FTC opposed the deal beginning in Dec. 2015, but the systems won the first court battle, with U.S. Northern District Judge Jorge Alonso denied the FTC’s request for an injunction in June 2016, ruling the FTC failed to show their anti-trust argument had merit.

The FTC’s fortunes changed on appeal, sending the case back to Alonso, who granted the injunction in a sealed ruling. That loss has led Advocate and NorthShore to cancel the proposed merger.

“We have determined with the Advocate Health Care leadership that the time, cost and uncertainty of pursuing any additional appeals would not be worthwhile,” NorthShore President and CEO Mark R. Neaman said in a statement.

The FTC successfully argued on appeal the merger would hurt competition in Chicago’s north and northwest suburbs, with the combined system controlling more than 50 percent of acute inpatient care services in the area. Advocate and NorthShore said that was an exaggeration, putting the real market share of their consolidated systems at 30 percent.

The networks brought in more $7 billion in revenue combined in 2015.

The scrapped merger represents another in a string of victories for FTC. A similar ruling in the commission’s favor led two Pennsylvania systems, Pinnacle and Penn State Hershey Medical Center, to abandon consolidation plans.