Two New York hospital systems, embroiled in a U.S. Justice Department antitrust lawsuit, tout their not-for-profit status as proof that a merger wouldn't be a bad thing.
But the union of North Shore Health System, Manhasset, and Long Island Jewish Medical Center, New Hyde Park, now rests in the hands of U.S. District Judge Arthur Spatt.
Since a 13-day hearing ended last month, final briefs have been filed and attorneys for both sides made their closing arguments Sept. 26.
Spatt will be ruling on the government's request for a preliminary injunction, although when isn't known.
If Spatt grants the government's motion for an injunction, the systems would be barred from merging until the merits of the government's antitrust case are resolved.
The Justice Department sued the systems in June in U.S. District Court in Uniondale, N.Y., charging a merger between the two would reduce competition in violation of Section 7 of the Clayton Act. The two systems collectively operate a dozen hospitals (June 16, p. 2).
The government says the systems are the only relevant acute-care providers in a two-county market. It contends the systems would exploit their market share to ward off price discounts to payers.
The systems, arguing they compete in a wider, four-county market with at least 50 hospitals, say their merger would not give them an illegally high market share.
In their final brief, North Shore and Long Island Jewish also dismiss the government's charge that a merger would increase prices.
"Unlike for-profit corporations, which exist to maximize shareholder return, any operating surplus that the parties might enjoy is channeled back into the community in the form of new programs, services and facilities to provide even higher-quality healthcare," the hospitals said. "The parties thus lack the same incentive to raise prices as for-profit companies."
The systems also have pledged to freeze their prices for two years.
In an earlier court filing, the government disputed the notion that not-for-profit status guarantees a rein on prices.
"There is no compelling reason to believe that defendants, as nonprofit hospitals, are any less likely to exercise market power than for-profit hospitals, and courts have regularly rejected such claims," the government said.