The American Hospital Association, which is led by Advocate Health Care CEO Jim Skogsbergh, is slamming the Federal Trade Commission's market definition to challenge the proposed merger of Advocate and NorthShore University HealthSystem.
The AHA argued in an amicus brief filed Monday that the Federal Trade Commission's geographic market definitions of Advocate and NorthShore, both based in the Chicago region, “sharply limit" other factors that should be taken into account when defining competition and "make no sense" because they ignore how healthcare markets work.
The AHA claims that the FTC failed to account for outpatient services Advocate and NorthShore provide as well as outpatient services other Chicago-area systems provide when it created market definitions.
The association also said the FTC “ignores how hospitals actually negotiate prices.” Final prices for many hospitals account for a wide geographic region that the FTC excluded in its market definition, the AHA claims.
The AHA also criticized the FTC's “narrow” market methodology, saying a broad range of factors relevant to specific circumstances should be considered when defining a market.
The FTC did not reply to a request for comment.
The FTC's market definitions have been sharply criticized before. U.S. District Judge Jorge Alonso declined to grant the FTC a preliminary injunction to block the merger because the geographic markets outlined by the FTC were “flawed.”
In its market definition, the FTC excluded Chicago hospitals such as Northwestern Memorial Hospital, Rush University Medical Center, the University of Chicago Medical Center and Lurie Children's Hospital. The FTC also only accounted for hospitals in the market that overlapped with both systems.
The FTC's main argument to pause the merger is that it will hinder competition and lead to higher prices for consumers. The FTC claims the new system, which would be called Advocate NorthShore Health Partners, would create the 11th largest not-for-profit hospital network in the nation and account for 60% of hospital services in Chicago's northern suburbs.
Both systems have contested the FTC's figures, claiming their services would account for about 28% of the market.
NorthShore and Advocate declined to comment on the brief.
An amicus brief supporting the FTC was filed last month by 11 states. The states claim the district court incorrectly sided with the health systems, and the deal will dampen competition.
