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Advocate Health Care and NorthShore University Health System merger falls to court ruling

by Thomas Dworetzky, Contributing Reporter | March 09, 2017
Business Affairs
Advocate Lutheran General Hospital
The merger between Advocate Health Care and NorthShore University Health System is dead after the pair lost a two-year battle with U.S. antitrust regulators this week.

"We are deeply disappointed to inform you that Federal Judge Jorge Alonso has just issued his ruling in our merger case, and has done so in favor of the Federal Trade Commission," NorthShore CEO Mark Neaman stated, according to the Daily Herald.

“We have determined with the Advocate Health Care leadership that the time, cost and uncertainty of pursuing any additional appeals would not be worthwhile,” Neaman said.

The FTC was happy with Alonso's decision.

"The FTC is delighted with today’s district court ruling, which enjoined this merger, and the parties’ subsequent decision to abandon the transaction," Tad Lipsky, acting director of the commission’s bureau of competition, said in a statement, according to Reuters.

"Advocate and NorthShore’s merger would likely have reduced the quality, and increased the cost, of health care for residents of the North Shore area of Chicago," Lipsky added.

The deal was first announced in 2014.

Alonso had reversed his own initial ruling giving the okay to the deal, which the FTC had appealed. The Appeals Court reversed his decision and sent the case back for reconsideration, according to the Chicago Sun-Times.

The FTC challenge in 2015 centered on the fact that it thought the deal would leave Chicago residents, especially in the northern suburbs, without a competitive health care marketplace – causing prices to rise.

Advocate and NorthShore had fought that analysis, pointing out that there was indeed competition、 including from Rush University Medical Center and the Northwestern Medicine system, which had merged with Cadence Health and KishHealth – and had stated that it sought to merge with Centagra Health System.

The Seventh Circuit U.S. Court of Appeals had determined that Alonso had made too little of the proposed merger's price-setting clout and sent the case back to him.

Alonso had then applied that guidance and granted the preliminary injunction.

“We are disappointed, but not discouraged by the court's decision," said Neaman.

The deal would have led to a 16-hospital group with approximately 45,000 employees, which would have cared for over 3 million patients a year.

It would have been the 11th biggest not-for-profit system in the U.S.

Nearman said he believed the ruling reflected the court’s decision to side with “the FTC’s view of the market, namely, that insurance companies’ needs take precedent over direct benefits to consumer,” according to The Cook County Record.

"We have believed since day one that this merger would be a big win for consumers and for health care," Jim Skogsbergh, Advocate's president and CEO told the Record. "As a health care ministry, we pursued this merger because it aligned with our mission and values to advance care and lower costs for the patients and communities we are so privileged to serve."

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