FTC plans to kill a hospital merger
The FTC is moving to block a proposed merger between Jefferson Health and Einstein Healthcare Network, two Philadelphia-based health systems. The two entities have a combined annual revenue of $5.9 billion.
The action is the first time the regulator has challenged a big healthcare merger in the last few years. Hospital mergers have been on the rise over the last several years, increasing consolidation across the sector. Other regulators, including the Department of Justice, have been accused by some of being too easy on proposed mergers without considering the full implications on competition.
In this case, the FTC is concerned the merger will limit competition in the area and leave patients with fewer healthcare options and it issued an administrative complaint. Jefferson Health is a non-profit health system operating in multiple states. Einstein Healthcare Network includes three medical centers, rehabilitation centers, outpatient centers and primary care locations.
“Patients in the Philadelphia region have benefitted enormously from the competition between the Jefferson and Einstein systems,” Ian Conner, director of the FTC’s Bureau of Competition, said in a statement. “This merger would eliminate the competitive pressure that has driven quality improvements and lowered rates. Throughout our investigation, we have benefited from close cooperation with our partners in the Office of the Attorney General of Pennsylvania.”
Jefferson and Einstein are competitors, according to the FTC, and the merger would “eliminate the robust competition” between the two health systems, according to the agency. The FTC is seeking a temporary restraining order and preliminary injunction to prevent the merger. In particular, general acute care hospitals would overlap in the case of a merger.
In addition, the merger would enable the parties to control at least 60% of the inpatient general acute care hospital services market in the surrounding North Philadelphia market, and at least 45% of the market in Montgomery County, the FTC alleges. The merging parties would also control at least 70% of the inpatient acute rehabilitation services marketing in Philadelphia.
Einstein and Jefferson remain confident the merger is beneficial to their served communities and are reviewing the FTC’s decision.
“We will take some time to review the challenge to better understand both their position and how to best move forward,” reads a statement from the two health systems. “We believe we have presented a strong and comprehensive case as to how the merger would benefit the patients we serve and advance our academic mission without reducing competition for healthcare services. At a time when regional and national politicians and leaders are seeking ways to better support essential safety net hospitals, we see this merger as a creative solution to preserve access and enhance services to the residents of the North Philadelphia.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."