The U.S. Justice Department and two Long Island, N.Y., hospital systems will square off in federal court this week in what promises to be a precedent-setting antitrust case.
At stake is a proposed merger between Long Island Jewish Medical Center, New Hyde Park, N.Y., and North Shore Health System, Manhasset, N.Y., two dominant forces in the healthcare market that collectively operate a dozen hospitals.
The hospitals have an arsenal of high-powered attorneys on their side, including James Rill, former assistant attorney general in the Justice Department's antitrust division. Rill is with Collier, Shannon, Rill & Scott, a Washington-based law firm.
"The Department of Justice has the burden of proof that this will be anticompetitive," said Jeff Soukup, a consultant to the hospitals. "We're saying it's pro-competitive."
Filed in June in U.S. District Court in New York, the case is important for two reasons: It's the first antitrust lawsuit the Justice Department has filed against a hospital merger since 1994. Also, it marks the first attempt by the government to halt a merger in a crowded urban market, where competitive boundaries are harder to define (June 16, p. 2).
A Justice Department spokeswoman declined to comment on the litigation.
U.S. District Judge Arthur Spatt will hear the department's request for a preliminary injunction against the merger. That hearing is expected to last until Aug. 19 in federal court in Uniondale, N.Y.
An expedited decision is expected next month, Soukup said.
In its lawsuit, the government alleged the two systems want to merge to prevent managed-care plans and others from forcing them to lower their prices. The government cited internal hospital documents that say a merger would prevent plans from "going down the street" to wrangle lower prices.
The systems have denied those allegations and said a merger would mean $188 million in operating efficiencies and the avoidance of certain capital costs.
They also contend they won't have an illegally high market share because they compete with 30 other hospitals in the area.