FTC continues appeal to block Ill. hospital merger

The Federal Trade Commission (FTC) and the Illinois Attorney General’s office have filed an appeal in another attempt to block a merger between two Illinois health systems, Advocate Health Care and NorthShore University Health System.

The appeal, filed July 15 in the U.S. Court of Appeals for the Seventh Circuit, came a month after a district court judge denied the FTC’s request for an injunction, saying its antitrust argument had no merit because of how the FTC defined the market share the combined systems would control.

The FTC argued the district court ruling didn’t take into account the substance of its antitrust argument, just the definition of the market affected by the merger.

“In particular, it questioned the Government’s decision to limit the market to local hospitals in the northern suburbs and suggested that the market should also include hospitals outside that area, including 'destination' hospitals—academic medical centers in downtown Chicago that provide highly sophisticated and specialized services and draw patients from across the Chicago area and beyond,” the appeal said. “In reaching these conclusions, the court rejected evidence that patients require local access for inpatient hospital services and that insurers must therefore include local hospitals in their provider networks.”

The appeal also argued the merger would result in “an 8 percent price increase across the six Advocate and NorthShore hospitals included in the market, amounting for approximately $45 million per year in higher costs.”

The merger would create a 16-hospital system that the FTC said would control 50 percent of the acute inpatient care services in Chicago’s north and northwest suburbs, making it the 11th largest not-for-profit hospital chain in the U.S.

Advocate and NorthShore countered in the district court case that its combined market share has been exaggerated by the FTC, placing the number closer to 30 percent.

Arguments in the appeal will be heard on August 19 in Chicago.

The FTC will be looking to turn around a recent string of losses on blocking hospital mergers. In May, the ruling on a similar court case in Pennsylvania also went against the commission. Also, a month after the Advocate-NorthShore district court decision, the FTC opted not to proceed with a challenge to a consolidation of two West Virginia hospitals.