FTC loses bid to stop Philadelphia hospital merger - Healthcare Dive

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Dive Brief:

• A federal judge will not issue an injunction to stop Jefferson Health's acquisition of Albert Einstein Healthcare Network in Philadelphia, arguing the Federal Trade Commission had failed to prove the area's insurers would likely suffer a price increase as a result of the combination.
• Judge Gerald Pappert of the Eastern District of Pennsylvania noted that there are "abundant healthcare options" in the region, citing 51 hospitals, and noted the insurer market is far more consolidated than the provider sector.
• Pappert essentially argued that the FTC needed to show extensive evidence that the area's insurers would have no choice but to accept a price increase if the deal were to proceed.

Dive Insight:

The challenge to Jefferson Health's bid for Albert Einstein was the first action to block a provider deal in years for the FTC. Now, it's hit a hurdle in the courts, though the agency could still appeal after this dismissal.

"The Court's ruling is disappointing, and we our considering our options," an FTC spokesperson said.

FTC has argued that both Jefferson and Einstein compete in acute care and rehab services and vie for inclusion in insurers' networks.

Pappert's ruling Monday, and the examples he used, essentially argued that given the number of competitors in the region, insurers could walk away from potential price increases the merged entity may impose by opting to redirect their members to other facilities.

Because there are so many systems, "no insurer can credibly assert that there would be 'no network' without a combined Jefferson and Einstein — something the insurers could say when Hershey and Pinnacle, the two largest Harrisburg area hospitals ... attempted to merge," Pappert wrote. He frequently cited the Hershey-Pinnacle case, which also was denied a preliminary injunction in district court but went on to win one in a federal appeals court.

Pappert also noted that no employers testified that they would have difficulty marketing a health plan to employees that excluded Jefferson and Einstein. In fact, the one employer that did weigh in, a school district, said it would be fine without the two.

The court also takes issue with whether the FTC properly defined the relevant markets in the lawsuit, an important hurdle in any case seeking to block a merger.

Pappert, a President Barack Obama appointee, was skeptical of the region's largest insurer's opposition to the merger during testimony. Particularly when the second-largest insurer had no concerns with the merger and does not believe it will pay higher rates.

Pappert said Independence Blue Cross, the largest carrier, has a "clear motive, other than antitrust concerns, to oppose this merger." Together, Jefferson and Einstein own a portion of Health Partners Plans, a Medicaid and Medicare insurance product. HPP operates the second-largest Medicaid plan in Philadelphia, behind IBC's.

A merger of Jefferson and Einstein would give the combined entity a 50% stake in HPP, though Jefferson is seeking to buyout the other partner, court dockets claim.

IBC's CEO, said of the potential insurer competition: "It remains to be seen how we are going to be able to collaborate with anyone who is in direct competition with us as an insurer."

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