Antitrust Law Daily Wrap Up, ANTITRUST NEWS: State AGs’ amicus brief supports FTC Illinois hospital merger challenge, (Jul 26, 2016)

By Linda O’Brien, J.D., LL.M.

Eleven state attorneys general are urging the U.S. Court of Appeals in Chicago to reverse a decision by the federal district court that denied the FTC’s request for a preliminary injunction blocking the proposed merger of Advocate Health Care Network and NorthShore University HealthSystem (FTC v. Advocate Health Care Network, Case No. 16-2492).

On June 20, the district court issued its order denying the FTC’s motion to halt the proposed combination of two of the leading providers of general acute care inpatient hospital services in Chicago’s northern suburbs, pending administrative proceedings, on the ground that the FTC failed to meet its burden of proving a relevant geographic market. The FTC has filed a notice of appeal in the case and the court has enjoined consummation of the proposed merger, pending appellate review.

In an amicus brief, the attorneys general for the states of Connecticut, Idaho, Iowa, Maine, Massachusetts, Minnesota, Mississippi, Montana, Oregon, Pennsylvania, and Washington note that consumers reap the benefits of competitive health care markets in their local communities. The recent wave of hospital consolidation has resulted in the creation of large health care systems that wield substantial market power.

The court erred as a matter of law, the brief states, by concluding that the FTC failed to meet its burden of defining a relevant geographic market. Specifically, the court did not assess whether the Commission’s geographic market satisfied the hypothetical monopolist test. Instead, the court emphasized the travel patterns of certain patients and did not consider that the willingness of those patients to travel would not deter a hypothetical monopolist’s ability to increase rates in an 11-hospital market in Chicago’s northern suburbs.

Mergers that increase a provider’s market power result in anticompetitive increases in the prices of health care services, according to the brief. Those mergers also reduce the incentives of providers to compete on service quality and force consumers to pay higher prices for reduced access and lower quality care. If upheld, "the court’s decision creates ill-informed law that would impede the ability of law enforcers to ensure consumers receive the benefit of vigorous competition in healthcare markets around the country," the brief concludes.

Companies: Advocate Health Care Network; NorthShore University HealthSystem

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