FTC dealt rare loss in Pennsylvania hospital merger case
In a setback to the Federal Trade Commission, a federal judge denied a request to temporarily block the merger of Penn State Hershey Medical Center and PinnacleHealth System, Modern Healthcare reported.
The ruling is a rare blow for the FTC, which has stopped a number of hospital mergers in recent years.
The FTC and the Pennsylvania attorney general can appeal the decision.
In deciding for the hospitals, U.S. District Judge John Jones said that the FTC failed to acknowledge the pressures of the changing healthcare environment, including the Affordable Care Act, fluctuations in Medicare and Medicare reimbursement and risk-based contracting.
"We find it no small irony that the same federal government under which the FTC operates has created a climate that virtually compels institutions to seek alliances such as the hospitals intend here," Jones wrote.
He also chided FTC for failing to consider how far many patients have to travel to reach hospitals, and for not including enough hospitals, in its definition of the two health systems' market.
"In sum, we find based on the hours of testimony and thousands of pages of exhibits presented by the parties and considered by this court, that the FTC's four-county 'Harrisburg Area' relevant geographic market is unrealistically narrow and does not assume the commercial realities by consumers in the region," the judge writes.
Jones also notes that the two hospitals have proactively worked with major payers in central Pennsylvania to ensure they don't raise rates after the merger.
The merger will combine Penn State Hersey's 508-bed facility with PinnacleHealth's 607-bed, three-campus system.
In a blog post on the university's website, the hospitals said the merger will increase patient access to a wider range of services and full-spectrum care.
"The Federal Trade Commission's Monday failure to halt a Pennsylvania hospital merger could help health care providers in future merger cases because in a novel move, the judge described the Affordable Care Act as a factor that could help justify industry consolidation, experts say," Law 360 noted.
Modern Healthcare Judge delivers FTC rare healthcare loss in Pennsylvania hospital case
Filed Under: Finance Hospital Administration