Enter to open, tab to navigate, enter to select
FTC Challenges Third Hospital Merger in Two Months
Practical Law Legal Update w-001-0998 (Approx. 3 pages)
FTC Challenges Third Hospital Merger in Two Months
by Practical Law Antitrust
| Published on 21 Dec 2015 • USA (National/Federal) |
The Federal Trade Commission (FTC) has recently filed three lawsuits to block hospital mergers in Huntington, West Virginia; Harrisburg, Pennsylvania; and Chicago, Illinois. In addition to administrative actions, the FTC is also seeking temporary restraining orders and preliminary injunctions in federal court to block the mergers.
On December 18, 2015, the FTC sued to block the proposed merger of Advocate Health Care Network and NorthShore University HealthSystem. This is the FTC's third lawsuit seeking to block hospital mergers since November. The FTC has also sued to stop Cabell Huntington Hospital's acquisition of St. Mary’s Medical Center in Huntington, West Virginia, and Penn State Hershey Medical Center's merger with PinnacleHealth System in Harrisburg, Pennsylvania.
The three recent challenges reflect that the FTC is continuing to focus on healthcare competition as a key area of enforcement. Healthcare mergers, including those between hospitals, physicians and medical clinics, have been on the rise, as well as a common source of merger litigation. The FTC has recently prevailed in court in challenges to hospital and physician mergers in Nampa, Idaho; Rockford, Illinois; and Toledo, Ohio.
The FTC alleges that the merger of Advocate and NorthShore would substantially lessen competition for general acute care inpatient hospital services in the North Shore area of Chicago. Challenging a healthcare merger in a major urban area is unusual. The FTC's most recent challenges have involved smaller cities or rural areas, such as the two other pending lawsuits, as well as recent enforcement actions in:
- Berks County, Pennsylvania (see What's Market, In the Matter of Keystone Orthopaedic Specialists, LLC and Orthopaedic Associates of Reading, Ltd. (consent decree)).
- Volusia County, Florida (see What's Market, In the Matter of H.I.G. Bayside Debt & LBO Fund II, L.P. and Crestview Partners, L.P. (consent decree)).
This is also the second hospital-merger challenge brought by the FTC in the Chicago area. The FTC successfully brought an action against a consummated merger between Evanston Northwester Healthcare Corporation and Highland Park Hospital in 2004. While there was no divestiture required in that case because the hospitals had already been integrated, the FTC did obtain a conduct remedy requiring Evanston to set up two independent teams to negotiate contracts with health insurers. (See In the Matter of Evanston Northwestern Healthcare Corporation and ENH Medical Group, Inc., File No. 100-0234.)
For more information on hospital mergers, see Practice Notes, Healthcare Competition: Providers and Insurers and What's Market: Healthcare Merger Enforcement Actions.