Not all Chicago-area insurers oppose a potential merger between Advocate Health Care and NorthShore University HealthSystem, according to testimony Monday in the Federal Trade Commission's case against the proposed deal.
UnitedHealthcare supports the potential tie-up, said Joanne Beck, vice president of network management for its parent company, UnitedHealth Group. United believes the merger will lower the cost of care by expanding Advocate's population health management program and the quality measures it has implemented, Beck said during testimony in U.S District Court in Chicago. The FTC is seeking a preliminary injunction to block the deal pending the outcome of its administrative challenge.
United plays a distant second place in the Chicago area to Blue Cross and Blue Shield of Illinois. United has about 15% to 16% of the market and Blue Cross has about 65% to 70%, Beck said.
Blue Cross and Blue Shield does not support the proposed merger, Steve Hamman, a senior vice president of provider partnerships and enterprise network solutions for the Health Care Service Corporation, the parent company of the Illinois Blues plan, testified in court last week. The Blues carrier believes the merger would give the systems leverage to raise prices.
The NorthShore-Advocate merger is one of the largest proposed deals the FTC has challenged in years. Many across the country are watching the case closely as hospital systems continue to combine in deals they say will lead to lower prices and higher quality and critics contend are money-grabs.
The FTC has scored a string of victories in recent years in hospital merger cases, and antitrust experts have speculated that NorthShore and Advocate may also have an uphill battle winning their case.
The FTC alleges that a union between the two systems would lead to higher prices and lower quality care. It says the combined systems would control 60% of general-acute inpatient hospital services in Chicago's north suburbs.
Advocate and NorthShore, however, say the FTC misidentified their market by leaving out key competitors. They also say they must combine to offer a new insurance product that would be priced 10% lower than the lowest comparable priced product available.
Hamman, the Blue Cross executive who testified last week, said that the possibility of Advocate getting an insurance license poses a “small threat” to the Illinois Blues plans.
UnitedHealthcare, however, sees no competitive threat, according to Monday's testimony.
An executive with insurer Aetna also testified Monday about some of the potential benefits of the deal.
Brigitte Nettesheim, CEO of Aetna's Accountable Care Solutions division testified Monday that the merger could allow for better care coordination and lower total medical cost within one of its existing products that already includes NorthShore and Advocate in its network.
Attorneys spent much of the day discussing an analysis by Thomas McCarthy, a health economist with Nera Economic Consulting who testified that the merger would not be anticompetitive. FTC attorney Daniel Zach then spent hours attempting to poke holes in that analysis in an often-tense line of questioning.
The systems say the FTC erred in leaving Northwestern Memorial Hospital in downtown Chicago out of the market analysis. The post-merger market share of a combined Advocate and NorthShore, they say, would be around 28%, not the 60% alleged by the FTC, when Northwestern and other key competitors are included.
James Dechene, Northwestern Memorial Healthcare senior vice president and general counsel, testified last week for FTC that the academic medical institution does not consider NorthShore or Advocate to be primary competitors.
But attorneys for the systems then attempted last week to expose other motivations for Northwestern to oppose the merger. On Thursday, NorthShore CEO Mark Neaman testified that Northwestern CEO Dean Harrison had told him that he hoped the FTC would win its case against the merger so Northwestern could merge with NorthShore.
Northwestern Medicine spokesman Christopher King declined Monday to comment on the litigation.
But he did say in an e-mail, "We are always interested in exploring options to collaborate with organizations that share our values if the potential collaboration advances our Patients First mission and complies with all regulatory requirements including antitrust laws."
The hearings are expected to continue Wednesday, and a decision on whether to grant the FTC a preliminary injunction to stop the merger is expected in coming months.