In their attempt to persuade a federal judge to support their union, Advocate Health Care and NorthShore University HealthSystem said in a new court filing that the court should look at the likely impact of their merger: lower prices for consumers and renewed competition among insurers competing for their business.
Not so, countered the Federal Trade Commission in its own filing: Any savings the systems would get by joining forces, including moving NorthShore's doctors to Advocate's lower reimbursement rates from insurers, would be short-term. The antitrust regulators argue that ultimately, consumers would be harmed by paying more for their care.
“The merged firm would have the leverage to demand higher rates in future negotiations” with insurers, the FTC said in the court filing. The agency renewed its call for the court to halt the merger until regulators can conduct an administrative hearing.
The latest filings, submitted to the court yesterday, aim to give both sides another chance to convince U.S. District Court Judge Jorge Alonso in Chicago. After the FTC sought to block the merger in December 2015 with a preliminary injunction, Alonso sided with the health systems.
The FTC appealed, and in October, the 7th U.S. Circuit Court of Appeals ruled that Alonso's decision not to halt the union over antitrust concerns was “erroneously flawed.” The court sent the case back to Alonso to re-evaluate the FTC's injunction request.
NATIONAL ATTENTION
The case has garnered attention nationwide because the outcome could alter the frenzy among hospitals to bulk up under the financial constraints of Obamacare. But that could all change under the new administration. President-elect Donald Trump has vowed to strip many parts of the Affordable Care Act.
Advocate and NorthShore announced their intention to merge in 2014, which would create the 11th largest nonprofit health system in the nation. The combined 16-hospital system would stretch from north suburban Libertyville to downstate Normal.
But the FTC says the larger network would control 60 percent of the north suburban hospital market. Much of the case has centered on how the FTC defined that market, excluding Advocate and NorthShore competitors like Northwestern Memorial Hospital, a popular academic medical center in Streeterville.
In yesterday's filing, Advocate and NorthShore say Alonso must further analyze which hospitals should be considered their competitors. The FTC must prove that the merger would lead to even a small price increase for patients. And the systems noted their strong support from several large national insurers, though that doesn't include Blue Cross & Blue Shield of Illinois, the dominant player with more than 70 percent of market share in the state.
Advocate and NorthShore also underscored more than $500 million a year in savings they project from the merger, including $30.2 million by having NorthShore physicians take on Advocate's lower reimbursement rates.
“These savings . . . are merger-specific: NorthShore has no reason to, and will not, transition to Advocate's lower reimbursement rates if the merger does not proceed,” the filing said.
In its filing, the FTC countered that the systems haven't shown that NorthShore can't reduce reimbursement rates on its own. The agency said the appellate court opinion “leaves no room for doubt that the North Shore area is a relevant antitrust market,” and it criticized the systems' projected benefits from the merger as “not reliable or independently verifiable.”
While the health systems highlighted a low-cost, narrow network health plan they could offer to employers, the FTC pointed out it's already for sale on the Obamacare exchange. An Advocate executive who testified during the trial didn't consider whether the system could make the plan more appealing without merging by upgrading facilities or hiring more doctors, the FTC said.
“No court has ever declined to preliminarily (halt) a merger where the (FTC) has shown a likelihood of success,” the agency argued. “This case warrants no exception.”
Representatives for the health systems and the FTC declined to provide additional comment.
"The latest jabs in Advocate, NorthShore fight to merge" originally appeared in Crain's Chicago Business.
