CHICAGO – The Federal Trade Commission has moved to block the proposed merger of Illinois-based Advocate Health Care and NorthShore University Health System citing to anti-competition concerns.

The commission filed an administrative complaint Dec. 18 against the proposed merger, which would give the combined system control over more than 50% of the general acute care inpatient hospital services in the Chicago North Shore area. The agency says such control would likely harm consumers – with rising healthcare costs and diminished incentives to upgrade services and improve quality.

"Advocate is one of the largest health systems in the Chicago area, and it competes directly with NorthShore in the northern suburbs of Chicago," Debbie Feinstein, director of the FTC's Bureau of Competition, said in a statement. "This merger is likely to significantly increase the combined system's bargaining power with health plans, which in turn will harm consumers by bringing about higher prices and lower quality."

The Commission has authorized staff to seek a temporary restraining order and a preliminary injunction in federal court to prevent the parties from completing the merger and to maintain the status quo pending the administrative proceeding.

The administrative trial is scheduled to begin on May 24. The federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

"We remain steadfast in our commitment to come together for the betterment of the patients and communities we serve," the hospitals said in a joint statement. "We believe that by bringing together our two organizations, we will lower costs, enhance care and expand access while driving innovation."

The action is the FTC's third challenge to a proposed hospital merger in recent weeks. It previously moved to halt Cabell Huntington Hospital's acquisition of St. Mary's Medical Center in the Huntington, West Virginia area and Penn State Hershey Medical Center's merger with Pinnacle Health System.

Both Illinois systems carry double-A level ratings and the rating agencies have taken a positive view of the proposed merger announced last year. Advocate already is the largest not-for-profit healthcare system in the state.

The agreement outlines plans to consolidate balance sheets and boards of directors, as well as to have a unified mission, vision and strategy. The heads of each system will serve as co-chief executive officers for a designated period.

Advocate is the larger of the two with 12 hospitals and has more than $1 billion of debt outstanding while NorthShore operates four hospitals and has about $300 million.

The new entity would be known as Advocate NorthShore Health Partners and operate 16 hospitals with more than $7 billion in annual revenues. The new system would become the nation's 11th largest and serve three million patients annually.

 

 

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