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FTC Suffers Another Hospital Merger Loss in Advocate-NorthShore

On Tuesday, June 14, 2016, the U.S. District Court for the Northern District of Illinois declined to temporarily block the proposed merger of Advocate Health Care Network and NorthShore University HealthSystem in the Chicago area, handing the FTC its second hospital merger loss this year. The FTC and the State of Illinois filed an administrative complaint in December 2015, seeking a temporary restraining order and a preliminary injunction to block the transaction.  As discussed in our previous blog post, the FTC alleged that the combined entity would operate the majority of the hospitals in the North Shore area of Chicago, and control more than 50% of the general acute care inpatient hospital services.

The district court disagreed.  In a briefly worded Order, the court found that "the plaintiffs have not met their burden of showing that there is a likelihood that they will succeed on the merits of their antitrust claims" and denied plaintiffs' motion for a preliminary injunction.  The court provided no insight regarding the rationale behind its decision.  The Memorandum Opinion and Order was filed under seal and the parties were given until Friday, June 17 to redact competitively sensitive information.  A public version of the Opinion will be issued after the court considers the proposed redactions.

This loss is significant in light of the FTC's previous hospital merger loss just last month in FTC v. Penn State Hershey Medical Center, 1:15-cv-02362 (M.D. Penn May 9, 2016) (currently on appeal to the Third Circuit) where the FTC's and the State of Pennsylvania's request for a preliminary injunction against the pending merger of Penn State Hershey Medical Center and Pinnacle Health System was denied.   As discussed in our prior analysis, that decision highlighted the tension between federal antitrust enforcers' belief that competition among many small competitors remains the key to lower healthcare costs, and the Affordable Care Act's drive to lower costs and achieve better health outcomes through shared risk and population health management.

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Dionne Lomax