On April 11, a federal court in Chicago began a hearing on the Federal Trade Commission’s motion to block NorthShore University HealthSystem (NSUHS), from consummating a merger with Advocate Health Care Network and to maintain the status quo, pending an administrative trial on the issue.
The FTC alleges that the merger would create the largest hospital system in the North Shore area of Chicago and control more than 60% of the general acute care inpatient hospital services. If the merger goes through, the merged entity would own six of the 11 hospitals in northern Cook and southern Lake counties. The FTC alleges that the result would likely be significantly harmful to consumers – with rising healthcare costs and diminished incentives 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 Debbie Feinstein, Director of the FTC’s Bureau of Competition, when the FTC announced it would seek to block the merger. “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.”
NSUHS and Advocate deny the allegations. Among other things, they claim that the FTC has not properly defined the market in which they compete, and that if Northwestern Memorial HealthCare in Chicago, Presence St. Francis Hospital in Evanston, and Rush University Medical Center in Chicago were included in the market, the merger would be permissible. They also argue that Blue Cross and Blue Shield of Illinois has power in negotiating health care prices and that if the merger is approved, they plan to create a new health insurance plan whose cost would be 10% less than the amount of the lowest comparable insurance available. The hearing is expected to be completed on May 6, and a decision made within a month or so after the hearing.