Feds head to court to block Chicago hospital merger

If the Federal Trade Commission (FTC) has its way, the proposed merger between Advocate Health Care and NorthShore University HealthSystem in Chicago will never see the light of day. This week it takes its case to the U.S. District Court to block the deal, claiming that the merger would reduce competition in the area and increase the costs of healthcare services.

The outcome could influence future mergers and healthcare competition, according to the Chicago Tribune.

"The merger is one of the biggest hospital deals that FTC has challenged, so all eyes are on it," Lisl Dunlop, an antitrust lawyer at Manatt, Phelps & Phillips in New York, told the publication.

If the merger is allowed to move forward, Advocate would join its 11 hospitals and a children's hospital with NorthShore's four hospitals. It would become the largest integrated healthcare delivery system in Illinois. Hospital officials say the deal would also allow them greater bargaining power against Blue Cross and Blue Shield of Illinois.

But the FTC believes that the insurers would simply pass their increased costs to consumers, who would have to pay higher premiums and out-of-pocket costs, according to the Tribune. The hospitals offered to cap post-merger prices but the FTC wasn't interested, the article said.

If the court sides with the hospitals, the organizations plan to offer local employers a low-cost health plan that would limit access to providers within the merged organizations. If the FTC is granted a preliminary injunction, the two organizations say they won't be able to offer the lower cost plan. 

Many believe the FTC will prevail as it has had success in recent years blocking mergers under the Clayton Antitrust Act, a 102-year-old law,

But in an opinion piece for Crain's Chicago Business, David W. Johnson, CEO of 4sight Health, said the healthcare systems aren't the villains. They are simply trying to offer greater integrated care, he said.

"The 500-pound gorilla is not Advocate-NorthShore," he wrote in the piece. "Rather, it's Blue Cross and Blue Shield of Illinois, which controls almost 75 percent of metropolitan Chicago's commercial insurance market."

To learn more:
- read the Chicago Tribune article
- here's the opinion piece