Judge blocks FTC's attempt to stop Jefferson-Einstein merger deal

A federal judge blocked the Federal Trade Commission's (FTC's) attempt to stop Thomas Jefferson University's acquisition of the Albert Einstein Healthcare Network.

Philadelphia-based Jefferson Health and Einstein Healthcare first announced the $599 million deal back in 2018. It would add Einstein's three general acute care hospitals and its inpatient rehab hospital to Jefferson's health system. But the FTC sued, alleging it would hurt competition for insurers in certain parts of Philadelphia.

Judge Gerald Pappert of the U.S. District Court for the Eastern District of Pennsylvania dismissed the FTC's complaint Tuesday, writing in a 62-page memo the government has not shown “that there is a credible threat of harm to competition."

The ruling followed six days of hearings in September. The court noted that it was assessing the case “through the lens of the insurers" and not patients seeking and receiving medical care, as they would most directly feel the impact of the increased price of care if competition for healthcare were substantially reduced in a particular market.

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In the memo, the court said the FTC needed to show enough evidence that insurers would not avoid a price increase in any one of the government's proposed markets by looking to hospitals outside those markets. But, the judge said, the FTC did not meet that burden.

In the ruling, the judge pointed to other regional competitors including Penn Medicine, Main Line Health System, Toward Health, Temple Health and Trinity Health Mid-Atlantic, as well as several additional hospitals. Meanwhile, he wrote, the insurance market in Philadelphia is much more consolidated with only four major commercial health insurance providers in Independence Blue Cross (IBC), Aetna, Cigna and United Healthcare. IBC is the area’s dominant commercial insurer, with more than 50% market share covering approximately 1.3 million lives and coverage agreements with every area health system.

The judge also pointed out that while Einstein may aspire to compete with Jefferson, Jefferson identifies its primary competition as Penn Medicine, Main Line Health, Temple University and Tower Health. That is because Einstein's commercial payer is small and comes almost entirely from their emergency room, rather than elective cases.