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From Antitrust Law Daily, December 18, 2015

FTC challenges merger of Chicago-area hospital systems

By Greg Hammond, J.D.

The FTC is attempting to block the proposed merger of Advocate Health Care Network and NorthShore University HealthSystem, two leading providers of general acute care inpatient hospital services in the North Shore area of Chicago, the FTC announced today.

The Commission filed an administrative complaint (In the Matter of Advocate Health Care Network, Docket No. 9369), alleging that the proposed transaction would create the largest hospital system in the North Shore area, an entity that would control more than 50 percent of the general acute care inpatient hospital services. As such, the deal would cause significant harm to consumers, according to the FTC, through increased health care costs and lower incentives to upgrade services and improve quality.

If the deal were to close, neither entry by new providers nor expansion by current providers would offset the likely harm to consumers caused by the lost competition, the FTC alleges. The hospital systems’ claims of potential costs savings and quality improvements were deemed unsubstantiated, not merger-specific, and insufficient to outweigh any likely competitive harm resulting from the merger.

Anticipating the FTC’s complaint, Advocate Health and NorthShore also released a statement announcing their intent to oppose the complaint.

“Prior to embarking on this 15-month intensive effort, we recognized the magnitude of what was before us,” stated Advocate President and CEO Jim Skogsbergh. “We laid out a detailed roadmap with the FTC on our plans to advance the delivery of care, improve quality, and reduce cost. Our commitment to elevate the model of care with new thinking requires openness to new approaches in this fast and evolving marketplace.”

The two hospital systems disclosed the proposed merger in September 2014. Besides the FTC, the deal must receive approval from the State of Illinois and the United Church of Christ.

Companies: Advocate Health Care Network; NorthShore University HealthSystem

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