FTC plans on blocking proposed merger between two Chicago hospitals
The Federal Trade Commission (FTC) announced on Dec. 18 that it planned on blocking the proposed merger of two major hospital systems in Chicago, the third time in six weeks that the FTC challenged a proposed hospital merger.
The combination of Advocate Health Care Network and NorthShore University HealthSystem would create a health system that controlled more than half of the general acute care inpatient hospital services in the North Shore area of Chicago, according to the FTC.
The FTC voted 4-0 in favor of issuing an administrative complaint and authorizing staff to seek a temporary restraining order and preliminary injunction. The FTC said the administrative trial is scheduled to begin on May 24, 2016.
The complaint alleges that the merger would increase healthcare costs, decrease the quality of care, diminish competition and increase the hospitals’ power to bargain with health plans.
“Advocate and NorthShore are close competitors with a history of upgrading medical facilities, investing in new technologies, and adjusting their approach to managed care contracting to compete against each other, according to the complaint,” the FTC said in a news release. “The proposed merger would eliminate the robust competition between them for inclusion in health insurance companies’ hospital networks.”
Advocate and NorthShore said they would challenge the FTC’s ruling.
“We remain steadfast in our commitment to come together for the betterment of the patients and communities we serve,” NorthShore President and CEO Mark Neaman said in a news release. “We believe that by bringing together our two organizations, we will lower costs, enhance care and expand access while driving innovation.”
They argued that the merger would create a patient-centered, integrated delivery model.
“Prior to embarking on this 15-month intensive effort, we recognized the magnitude of what was before us,” Advocate President and CEO Jim Skogsbergh said in a news release. “We laid out a detailed roadmap with the FTC on our plans to advance the delivery of care, improve quality and reduce cost. Our commitment to elevate the model of care requires a new way of thinking in this fast and evolving marketplace.”
On Nov. 6, the FTC issued an administrative complaint to block the proposed merger of Cabell Huntington Hospital and St. Mary’s Medical Center, which are three miles apart in Huntington, West Virginia. The combination would lead to the hospitals having a more than 75 percent market share, according to the FTC. The administrative trial is scheduled to begin on April 5, 2016.
“It is our opinion that the FTC’s action announced today misreads the highly competitive landscape in our Tri-State region and overlooks the enormous community benefits that would result from the combination of CHH and SMMC,” Cabell Huntington Hospital President and CEO Kevin N. Fowler said in a news release. “Despite the FTC’s decision, we remain committed to this acquisition as we believe it assures quality medical care for the residents of our region.”
On Dec. 8, the FTC announced it would attempt to block the merger of Penn State Hershey Medical Center and PinnacleHealth System, which would create an entity that controls more than 64 percent of the Harrisburg, Pennsylvania market. The administrative trial is scheduled to begin on May 17, 2016.
“We are extremely disappointed that the FTC does not share the enthusiasm of the many employers, community leaders, private physicians, commercial insurance providers and others who have taken recognized the benefits of our integration and demonstrated their broad support for it,” Penn State Hershey Medical Center and PinnacleHealth System said in a news release. “We firmly believe that the integration of PinnacleHealth and Penn State Hershey serves the best interests of patients and the entire central Pennsylvania community. The joining of our two health systems is completely consistent with the goals of the Affordable Care Act. It creates the depth of services and scale that is required to manage the health of distinct populations of patients and better positions us to provide the most appropriate care, in the most appropriate setting at the lowest possible cost.”
Executive Editor
Tim Casey joined TriMed Media Group in 2015 as Executive Editor. For the previous four years, he worked as an editor and writer for HMP Communications, primarily focused on covering managed care issues and reporting from medical and health care conferences. He was also a staff reporter at the Sacramento Bee for more than four years covering professional, college and high school sports. He earned his undergraduate degree in psychology from the University of Notre Dame and his MBA degree from Georgetown University.