The Federal Trade Commission has authorized action to block the planned merger of Downers Grove, Ill.-based Advocate Health Care and Evanston, Ill.-based NorthShore University HealthSystem — a deal that would create the largest health system in Illinois.
In an administrative complaint, the FTC claimed the proposed merger would likely do "significant harm to consumers." If the two entities combined, they would operate a majority of the hospitals in the Chicagoland area and control more than 50 percent of the general acute care inpatient hospital services. The FTC said that would lead to higher healthcare costs for consumers and diminish incentives for the system to upgrade services and improve quality.
"Advocate is one of the largest health systems in the Chicago area, and it competes directly with NorthShore in the northern suburbs of Chicago," said Deborah Feinstein, director of the FTC's Bureau of Competition. "This merger is likely to significantly increase the combined system's bargaining power with health plans, which in turn will harm consumers by bringing about higher prices and lower quality."
The complaint also alleges the costs savings and quality improvements that Advocate and NorthShore claim will result from the merger are neither substantiated nor merger-specific. The FTC claims the potential cost savings and purported quality improvements are "insufficient to outweigh the likely competitive harm resulting from the merger."
To prevent Advocate and NorthShore from moving forward with the merger, the FTC has also authorized its staff to seek a temporary restraining order and a preliminary injunction in federal court. Advocate and NorthShore intend to oppose the petition, according to Crain's Chicago Business.
"We remain steadfast in our commitment to come together for the betterment of the patients and communities we serve," said NorthShore President and CEO Mark Neaman, according to the report. "We believe that by bringing together our two organizations, we will lower costs, enhance care and expand access while driving innovation."
This challenge marks the third action the FTC has taken against a proposed hospital merger in recent weeks. The agency recently took steps to block the merger of Cabell Huntington (W.Va.) Hospital and Huntington-based St. Mary's Medical Center, and the FTC also challenged the proposed merger of Penn State Milton S. Hershey (Pa.) Medical Center and Harrisburg, Pa.-based PinnacleHealth.
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