Attorneys for the Federal Trade Commission and Evanston (Ill.) Northwestern Healthcare presented closing arguments in the FTC's effort to force the three-hospital system to divest Highland Park (Ill.) Hospital. FTC Administrative Law Judge Stephen McGuire is expected to rule on the matter by the end of summer, and an appeal to federal court by one or both parties seems likely to follow. The FTC, in its first hospital merger challenge in seven years, argued that Evanston Northwestern used the resulting market power from its 2000 acquisition of Highland Park to raise insurers' rates significantly, with several health plans reporting price increases in the range of 40% to 60%. Previously, insurers played the hospitals against each other through selective contracting to limit rate increases to about 4% to 8%, FTC Counsel Chul Pak said in reviewing the agency's case. "This merger was very much about money," Pak said.
During the five-months-long proceeding, attorneys for Evanston Northwestern portrayed Highland Park as a hospital on a downward spiral -- deeply in debt, suffering quality problems and in need of a strong partner. In closing arguments, Duane Kelley, an attorney from the Chicago office of Winston & Strawn, representing the health system, said the FTC had failed to prove the merger was anticompetitive. He said the price increases resulted from historic below-market rates. Co-counsel Michael Sibarium said Evanston Northwestern had improved patient care at Highland Park and invested significantly in the hospital since the merger. The FTC's administrative complaint, filed in February 2004, was the only antitrust challenge to arise from the agency's review of several completed hospital mergers. -- by Mark Taylor