Advocate Health Care and NorthShore University Health System's on-again off-again merger again appears to be off.
The Federal Trade Commission's attempt to block the deal, initially rebuffed by a U.S. District Court, was reinstated by the 7th U.S. Circuit Court of Appeals this week. The lower court will now decide if it will grant the FTC's request for a preliminary injunction that will block the deal.
The FTC said merging the two hospital systems into a single 16-hospital system would allow for a market monopoly that could extract higher rates from payers. Advocate and NorthShore argued that the market analysis they used was too narrow.
The appeals court concluded that the lower court's decision to allow the merger to move forward was “clearly erroneous” and that the case should go to trial.
The health systems protested the decision. “We believe that blocking this merger will be a loss to consumers and further underscores the conflicting message with the objectives of the Affordable Care Act,” they said in a statement.
The FTC has been highly active in attempting to block hospital and health system mergers in recent years. Late last year it intervened between the merger of Cabell Huntington Hospital and 393-bed St. Mary's Medical Center in West Virginia. FTC Chairwoman Edith Ramirez said earlier this year that she was concerned that continued mergers and acquisitions would have an impact on both healthcare prices and the quality of care delivered.
The FTC's counterpart, the U.S. Department of Justice, has also been highly active. It has indicated it will likely take a tough look at pending mergers in the insurance sector, particularly between Humana and Aetna and Anthem and Cigna. Several recent promotions inside the Justice Department have also indicated that the agency will take a close look at mergers and acquisitions within the healthcare sector.