The FTC, on the other hand, said in a statement that it was “pleased” with the latest ruling. “We are looking forward to proving our case,” Debbie Feinstein, director of the FTC's Bureau of Competition, said in the statement.
Advocate and NorthShore first proposed merging in 2014. Combined, the 16-hospital system would stretch from north suburban Libertyville to downstate Normal. The hospital networks had a total of $7.02 billion in annual revenue in 2015.
The FTC took its case to court in December, alleging the merger would “substantially lessen competition and cause significant harm” to consumers by increasing health care costs. The new system, which would be called Advocate NorthShore Health Partners, would create the 11th largest nonprofit hospital network in the nation and command about 60 percent of hospital services in the northern suburbs, the FTC alleged.
Advocate and NorthShore countered that the FTC wrongly defined their market, that their North Shore market share is closer to nearly 30 percent, and that they would save consumers up to $1.1 billion a year with a new health insurance plan.
How could the hospitals win? They could offer to divest some facilities, but that would defeat the purpose of their goal to bulk up in an effort they say would better serve patients.
They already offered the FTC a guarantee that they wouldn't raise prices significantly and would charge market rates, a deal antitrust regulators apparently balked at.
They could just affiliate to join forces without merging, but then they might not be able to jointly negotiate contracts with insurers to get better reimbursement rates.
In the meantime, this case is being watched nationwide. Closer to home, hospitals looking to add heft in the era of Obamacare are waiting to see how the Advocate-NorthShore case will impact just how big they can get without raising antitrust concerns.In a wave of consolidation, academic medical centers in particular, such as Northwestern Medicine and University of Chicago Medicine, are going after community hospitals. This helps keep patients in their neighborhoods, but provides a steady referral base to the academics when patients need to see specialists
"Decision time in Advocate, NorthShore merger battle: stick it out or bail" originally appeared on the website of Crain's Chicago Business.