NorthShore, Advocate abandon merger after judge’s ruling

NorthShore University Health System and Advocate Health Care are ending their proposed merger after a federal judge on Tuesday ruled against the deal.

U.S. District Judge Jorge Alonso ruled in favor of the Federal Trade Commission, granting the federal agency an injunction to temporarily stop the merger. In response to the ruling, the two Illinois health systems agreed to terminate the deal.

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In a message to staff, NorthShore CEO Mark Neaman said pursuing future appeals would not be worthwhile. The merger was first announced in 2014 and would have brought together NorthShore’s four hospitals with Advocate’s 11 facilities and children’s hospital to create one the largest health system in Illinois.

“We are disappointed, but not discouraged by the court’s decision,” Neaman said. “These past two years we have seen enormous changes in the financing of healthcare—by both governmental and private insurers. During this same period, NorthShore has continued to invest in our people, technology and facilities with record results.”

Advocate CEO Jim Skogsbergh echoed the sentiments in his own memo, obtained by FierceHealthcare. 

“We have believed since day one that this merger would be a big win for consumers and for health care,” he said. “As a healthcare ministry, we pursued this merger because it aligned with our mission and our values to advance care and lower costs for the patients and communities we are so privileged to serve.”

The merger has seen a volley of court decisions since the FTC decided to challenge the alignment in 2015. Alonso first refused to order an injunction in June 2016, but a federal appeals court reinstated the FTC’s injunction in October. The case was then sent back to Alonso for review.

Tad Lipsky, acting director of the FTC’s Bureau of Competition, said in a statement that the agency is “delighted” that the merger will not go through. “Advocate and NorthShore’s merger would likely have reduced the quality, and increased the cost, of health care for residents of the North Shore area of Chicago,” Lipsky said.

Critics of the merger had also expressed concern that it could hurt Chicago-area payers due to the lack of competition.