Acknowledging the U.S. Justice Department has concerns about their merger, two Rockford, Ill., hospitals are taking an unusual path in hopes of avoiding an antitrust investigation.
Saint Anthony Medical Center and SwedishAmerican Hospital, two of Rockford's three hospitals, withdrew their application for antitrust clearance Oct. 21 and re-submitted it two days later. By doing so, they won another 30 days to explain themselves to the government in a less formal context than an antitrust investigation.
"The normal way to get more time is for the government to issue a second request (for information)," said the Rockford hospitals' attorney, Tanya Vanderbilt, with the Washington law firm of Epstein Becker and Green. "It's possible we avoid it (a second request) this way. But there's certainly no guarantee."
The first time the hospitals submitted pre-merger notification documents was Sept. 21.
Hospitals usually submit pre-merger notification documents to federal authorities for antitrust clearance and wait 30 days for the government to clear the deal, sue or make a second request of information. A second request typically indicates a full-blown antitrust investigation. Hospitals prefer to resolve antitrust concerns outside the context of a formal investigation, which can be costly and delay a merger indefinitely.
Vanderbilt acknowledged the government has problems with the deal but wouldn't reveal them. "They thought we made some more plausible arguments, but they thought we need some more backup," Vanderbilt said.
The legal maneuvers by 210-bed Saint Anthony and 298-bed SwedishAmerican come after their competitor, Rockford Health System, parent of 401-bed Rockford Memorial Hospital, called off its proposed affiliation with the Mayo Clinic (Oct. 27, p. 6).
The merging hospitals pulled their request Oct. 21, two days before the Rockford-Mayo deal fell apart. "Our withdrawal had nothing to do with the Mayo-Rockford deal," Vanderbilt said.
Antitrust analysts, however, say the breakup of the Mayo-Rockford deal could stack the deck against Saint Anthony-SwedishAmerican. The two would control 56% of the acute-care market in the city, and Rockford Memorial could be deemed weaker without the Mayo link.
It isn't surprising Saint Anthony and SwedishAmerican are acting so cautiously. In 1988 SwedishAmerican's proposed merger with Rockford Memorial prompted the Justice Department to file the first-ever antitrust lawsuit aimed at blocking a merger of two not-for-profit hospitals.
The hospitals called off the deal after losing in federal district and appellate court.