FTC seeking to break apart hospital merger

The commission's look at an Illinois deal could signal more moves against hospitals that merged, then raised their prices.

By Katherine Vogt, AMNews staff. Feb. 14, 2005.

Five years after Evanston Northwestern Healthcare Corp. took over Highland Park Hospital in suburban Chicago, the Federal Trade Commission is seeking to break apart the merger, perhaps signaling that the agency is ready to take a fresh look at hospital consolidation.

At a hearing before an administrative law judge, scheduled to begin Feb. 10, the FTC was to get its chance to prove that the merger gave Evanston Northwestern unfair market dominance that it used to boost prices at its three hospitals well beyond those at comparable facilities at the same time. The health system has denied the allegations. There has been no indication when a ruling would be given.

Though consolidation has been seen in other health care sectors, most observers caution against believing that the case could signal an impending FTC crackdown on mergers in managed care or among physician groups. But observers say the case is significant, because it could show that the government has begun looking at hospital mergers already consummated, after losing roughly eight to 10 cases in the 1990s that sought to stop mergers as they were happening.

"What the government can now do is go back and look at the post-acquisition behavior of the merged firm and determine whether the acquisition was in fact anticompetitive or pro-competitive," said Robert W. Doyle Jr., who spent 20 years at the FTC and is now an antitrust attorney with Sheppard, Mullin, Richter & Hampton in Washington. "And if prices were up post-acquisition, the FTC can look at that evidence and decide whether to challenge that acquisition."