Jefferson Health, Einstein Healthcare Network ink merger deal after FTC legal challenge falls flat

Hospital mergers
Jefferson Health and Einstein Healthcare Network finalized a merger to create a new 18-hospital system. (Jens Magnusson/Getty Images/Ikon Images)

Jefferson Health and Einstein Healthcare Network have finalized their merger that prompted a legal battle with the Federal Trade Commission (FTC).

The merger, finalized Monday, will bring together two health systems in the greater Philadelphia area to form a new 18-hospital system.

“Einstein and the new Jefferson together represent an opportunity for the Philadelphia region to creatively construct a reimagining of healthcare, education, discovery, equity and innovation that will have national and international reverberations,” said Stephen Klasko, president of Thomas Jefferson University and Jefferson Health, in a statement.

Jefferson agreed in 2018 to acquire three acute care hospitals and an inpatient rehab hospital from Einstein, bringing the system from 14 to 18 hospitals.

The systems touted new benefits from the merger, including access to large midwifery and transplant programs in the Pennsylvania region along with two trauma centers.

RELATED: FTC's backlog is delaying regulatory review of Beaumont-Spectrum merger, systems say

But the FTC threw a major roadblock into the deal, suing in federal court to block it. The FTC’s decision centered on the increase in Jefferson’s market share that will occur due to the merger along with the assertion Jefferson could pressure insurers to charge higher rates for premiums.

However, a federal judge ruled in December that the lawsuit didn’t prove the merger would credibly harm competition.

The FTC decided in March to no longer challenge the merger, enabling Jefferson and Einstein to move forward.

But more mergers like the Jefferson-Einstein deal could find themselves in the same situation. A July executive order from President Joe Biden calls for the Justice Department and the FTC to explore the guidelines for reviewing mergers that could raise prices.

The FTC has also successfully scuttled some hospital mergers. Methodist Le Bonheur called off a deal to buy two Memphis, Tennessee-area hospitals from Tenet after the FTC sued to block it over concerns surrounding prices and quality.