Kapala's order requires the two systems not to consummate their Jan. 31 affiliation agreement and to maintain the status quo until the FTC can conclude an administrative review of the deal, including all appeals. An administrative law judge for the FTC is scheduled to begin a hearing on the deal on April 17.
“After a thorough review, the court concludes that the FTC has demonstrated a likelihood of success on the merits, and that the equities weigh in favor of granting a preliminary injunction,” Kapala wrote.
In a written statement, hospital officials called the ruling disappointing in light of a Feb. 28 decision by the Illinois Health Facilities and Services Review Board to extend a certificate of exemption, which they said grants the hospitals state approval for the change of ownership.
“We maintain that combining two of Rockford's three healthcare systems into one is in alignment with the mandate presented by healthcare reform and is the best means to promote and ensure healthy competition in the marketplace,” the hospitals' joint statement says. “This affiliation makes certain that healthy competition from within will continue to drive the Northern Illinois healthcare marketplace.”
FTC Bureau of Competition Director Richard Feinstein said in a written statement that Kapala's decision was a victory for competition and consumers. “If this deal is ultimately allowed to proceed, the result will be less competition and higher healthcare prices in the Rockford area. We look forward to presenting our case before the Administrative Law Judge later this month," the statement said.
The FTC says the acquisition would leave the combined entity with control over 64% of the local market for general hospital care and 37% of the market for primary-care physician services, essentially leaving just one competitor in both service lines: 320-bed SwedishAmerican Hospital.
In legal filings, OSF and Rockford Health System challenged the FTC's definitions of product markets and argued that the merger would increase efficiency and improve operational and clinical effectiveness. But Kapala ruled that the FTC had met its burden to show enough of a likelihood of a success on the merits of the case that justify the injunction.