The Federal Trade Commission is challenging Reading (Pa.) Health System's proposed acquisition of the Surgical Institute of Reading. The agency said in a news release that the acquisition would reduce competition in the Reading market and lead to decreased quality and higher healthcare costs. A lawsuit will be filed jointly with the Pennsylvania attorney general in federal district court seeking a preliminary injunction to bar the deal pending the outcome of its challenge before an FTC administrative law judge. Reading Health System disclosed its intention to buy the Surgical Institute in May and anticipated closing the deal next summer. While the more than two dozen doctors at the Surgical Institute would remain independent, the company's 125 nurses and support workers would become hospital employees, the system said when the deal was announced. Reading Health System could not be reached for comment at deadline. The challenge comes about a week before the U.S. Supreme Court is scheduled to hear oral arguments in another closely watched hospital merger case, FTC v. Phoebe Putney Health System. In that case, the FTC challenged a deal that would see a Georgia county hospital authority acquire the only competitor to a publicly owned hospital in the same market. The FTC prevailed last year in its challenge of ProMedica's acquisition of St. Luke's Hospital in Maumee, Ohio, and the Ohio health system's appeal is pending before the 6th U.S. Circuit Court of Appeals.