A senior official with a three-hospital Illinois healthcare system denied allegations that were filed against it Tuesday by the Federal Trade Commission.
In the FTC's first hospital merger challenge in six years, the FTC alleged in a 12-page administrative complaint that not-for-profit Evanston Northwestern Healthcare's 2000 merger of its Evanston Hospital and Glenbrook Hospital with Highland Park Hospital resulted in anticompetitive price increases in the cost of hospital and physician services. The FTC is seeking the divestment of Highland Park Hospital.
The FTC also alleged that when the hospitals merged Highland Park's Independent Physician Group with the ENH Medical Group, the system fixed prices by illegally negotiating on behalf of independent, nonemployed physicians.
David Loveland, senior vice president of corporate relations at ENH, said the system controls only 16% of the highly competitive North Shore market in the Chicago area.
"One reason we are so chagrined by the FTC action is that this is not a situation where we have dominant market clout," Loveland said. "Competition has only increased since we merged with Highland Park. The FTC decision has ignored the overwhelming proof of the enormous benefits of this merger."
He said advanced cardiac care is now available in Lake County, Ill., for the first time.
"We've invested $85 million since the purchase and have another $50 million in new construction," said Loveland, who attributed the FTC challenges to complaints from insurers.
"This is part of an ongoing battle between hospitals and payers, not about who wins or loses, but about whether you can move the perceptual blame for high healthcare costs from (citing a line from a popular movie, As Good As It Gets) 'those HMO bastards' to someone else."
Loveland said the price increases the FTC cited were one-time catch-ups negotiated to make up for an estimated $80 million in losses from 1998-2002 due to the Balanced Budget Act of 1997.
"I think hospitals have to be very concerned," Loveland said. Chicago healthcare antitrust attorney David Marx of the firm McDermott, Will & Emery said the FTC is challenging both the merger and the alleged price-fixing on behalf of physicians.
"That added feature of the network component makes this different from any other previous hospital merger challenges," said Marx, who did not represent any parties in the ENH case but was hired by another local health system, Mokena, Ill.-based Provena Health, in the FTC's investigation into a previously consummated hospital merger in Waukegan, Ill.
"The merger and physician network components are not unrelated," Marx said. "That gives the FTC two ways to win, making it a more attractive case from their (the FTC's) perspective."