Antitrust Law Daily Wrap Up, TOP STORY: Penn State Hershey, PinnacleHealth to fight FTC merger challenge, (Dec 17, 2015)

By Greg Hammond, J.D.

PinnacleHealth System and Penn State Hershey Medical Center have announced today that they will fight the FTC and Pennsylvania Attorney General’s challenge to the two companies’ proposed merger. On December 9, the FTC and Pennsylvania Attorney General filed a complaint in federal district court seeking a preliminary injunction to stop the deal pending administrative trial. The district court, by agreement of all parties, issued a temporary restraining order that blocks the merger, according to a Penn State announcement (In the Matter of The Penn State Hershey Medical Center, File No. 141 0191, Dkt. D9368).

The antitrust enforcers claim that the combination of the two health care providers would substantially reduce competition in the area surrounding Harrisburg, Pennsylvania, and would lead to reduced quality and higher health care costs for the area’s employers and residents. The FTC’s administrative complaint further asserts that the proposed transaction would eliminate price competition, increase the merged entity’s bargaining leverage, and would eliminate vital quality competition. The agreement is therefore illegal under Section 5 of the FTC Act and the merger would violate Section 7 of the Clayton Act, the Commission claims.

“The integration of Milton S. Hershey Medical Center and PinnacleHealth makes good sense for patients, employers and our community and we intend to prove it in federal court,” said CEO of Penn State Health and Milton S. Hershey Medical Center, Dr. A. Craig. Hillemeier. “As one health system, we can better provide patients with the highest quality care, in the most appropriate setting at the lowest possible cost. Our integration also provides a powerful platform to produce future generations of health care providers and make discoveries that improve health.”

“The joining of our two health systems is completely consistent with the goals of the Affordable Care Act,” PinnacleHealth wrote in a press release in response to the FTC’s complaint. “It creates the depth of services and scale that is required to manage the health of distinct populations of patients and better positions us to provide the most appropriate care, in the most appropriate setting at the lowest possible cost.”

Penn State and PinnacleHealth are allegedly the two largest health systems in the greater Harrisburg, Pennsylvania, area. In particular, Penn State owns and operates one general acute care hospital in the Harrisburg area and PinnacleHealth operates three general acute care hospitals, the FTC’s administrative complaint alleges.

Companies: The Penn State Hershey Medical Center; PinnacleHealth System

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