Citing anti-competitive risks, Pennsylvania Attorney General Michael Fisher last week said his office is withholding for six months its antitrust approval of the merger of Geisinger Health System and Penn State University Hospital-Milton S. Hershey Medical Center.
The agency, however, allowed the two systems to consummate their merger July 1 under the assumption an antitrust settlement will be reached by year-end.
Fisher's June 30 announcement followed MODERN HEALTHCARE's disclosure that the deal may be hung up by a state antitrust investigation (June 30, p. 2). Previously, executives of the two systems said their corporations had received all the necessary regulatory approvals to consummate their deal.
The 465-bed Penn State facility is in Hershey, Pa. Geisinger is headquartered in Danville, Pa.
Fisher said the transaction creates two threats to competition. First, the combined system would have a monopoly over tertiary-care services in a 20-county area in central Pennsylvania, he said. And second, the new system could protect Geisinger's HMO, Geisinger Health Plan, from competition by denying competing plans access to the system's services.
During a six-month extension for antitrust review, set to expire Dec. 31, Penn State and Geisinger would be required to "negotiate in good faith" with any currently licensed health plan as well as those with pending licenses. Both systems said they are willing to contract for tertiary care with any health plan, according to the attorney general's settlement letter.
Although last week's pact makes no ironclad promise that the attorney general would refrain from filing suit to undo the merger in December, the systems went ahead July 1 with a ceremony to cement their deal.
"We are pleased to proceed with the merger," said Bruce H. Hamory, M.D., chief operating officer at Hershey Medical Center, in a statement. "We believe the attorney general's continuing review will demonstrate that there are no anti-competitive effects resulting from the merger."