A federal judge last week ruled against the proposed union between Advocate Health Care and NorthShore University HealthSystem, leading the two Chicago-area hospital systems to announce that they will not continue their merger effort.
NorthShore CEO Mark Neaman wrote in a memo to employees that the time, cost and uncertainty of pursuing an appeal would not be worthwhile.
Experts believe the decision will have a chilling effect on big mergers nationwide. “It certainly says that mergers of large systems that would create market power above a certain market share will receive significant scrutiny,” says Allan Baumgarten, an independent consultant in Minneapolis who studies hospital markets.
Throughout their merger efforts, NorthShore and Advocate argued that joining forces would lower prices for consumers by creating renewed competition among insurers bidding for the hospitals' business.
The Federal Trade Commission disagreed, stating that any savings would be short-term and that consumers would ultimately pay more for healthcare.
In his memo, Neaman said the ruling and the FTC's perspective demonstrate “that insurance companies' needs take precedent over direct benefits to consumers.”