Advocate, NorthShore say FTC can't win merger battle appeal

Advocate Health Care and NorthShore University HealthSystem say the Federal Trade Commission has no economic or factual basis to continue challenging a proposed merger between the two systems.

In a brief filed Monday in a federal appears court, the two Chicago-area health systems defended a lower court’s rejection of FTC’s proposed geographic market and said there was no reason to overturn the decision and halt the merger.

“The FTC’s evidence did not support its proposed market–a limited set of eleven hospitals in selected portions of Cook and Lake Counties,” the hospitals said. “The court correctly found that the FTC’s proposed market excluded critical, real-world competitors and substitutes for those hospitals without any adequate justification. The FTC has demonstrated no error–much less clear error–in this conclusion.”

U.S. District Judge Jorge Alonso in June refused to grant the FTC a preliminary injunction to halt Advocate’s and NorthShore’s proposed merger, saying the agency had not shown that it would likely win the case on its merits and rejecting the proposed geographic market. The FTC has to establish an appropriate market in order to move forward with its antitrust challenge.

Advocate and NorthShore maintain the FTC left out their most likely competitor—Northwestern Memorial Hospital—and several other competitors when it narrowed the 70-hospital Chicagoland region down to an 11-hospital “North Shore Area” for its merger challenge.

“The evidentiary record confirms that no one—insurers, patients or providers—has ever regarded the FTC’s gerrymandered, 11-hospital market to be a distinct market for inpatient services,” the hospitals said.

Within days, the FTC appealed Alonso’s decision. Oral arguments are scheduled for August 19.

(This story first appeared on the website of Crain’s sister publication Modern Healthcare.)

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