Economists call FTC's Evanston solution flawed

A group of eight economics professors have filed a friend-of-the-court brief arguing that the FTC's decision on Evanston (IL) Northwest Healthcare's merger simply doesn't work. The professors argue that the corporate rules created by the FTC--which require the system's newly-merged hospital to bargain for managed care contracts separately from the existing two hospitals--won't really foster competition. Since the three hospitals are all acting on behalf of parent company ENH, they still have an incentive to collude on pricing, the professors argued. (The FTC had fashioned this remedy after finding that the 2000 merger between ENH and Highland Park (IL) hospital had driven anti-competitive price increases.) The FTC currently has until Oct. 29 to respond to the plan ENH filed describing how the hospitals would conduct independent managed care negotiations.

To learn more about the debate:
- read this Modern Healthcare article

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