Some interesting news on hospital merger and anti-trust enforcement.
A federal appeals court on Tuesday blocked the proposed merger of the two largest hospital systems in the Harrisburg, Pennsylvania, area.
By a 3-0 vote, the 3rd U.S. Circuit Court of Appeals in Philadelphia ordered a preliminary injunction against the combination of Penn State Hershey Medical Center and PinnacleHealth System.
The court said the U.S. Federal Trade Commission and the commonwealth of Pennsylvania were likely to succeed on the merits of their claim that the merger would be anti-competitive.
The Federal Trade Commission (FTC) had a string of losses this spring at the district court level when they sued to stop mergers in Central Pennsylvania and Chicago. They lose in both cases at the district court level as the judges used (according to relevant healthcare economists) an obsolete standard of assessing market impact.
The FTC is one of the major administrative levers to break up consolidated provider pricing power and as long as the courts are willing to use the FTC’s preferred methodology of determining anti-competetive action, there is a lot of space for the FTC to act on new mergers.