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Federal Trade Commission moves to block Advocate Health, NorthShore University Health merger

FTC said the new Advocate would operate the majority of the hospitals in the North Shore of Chicago.

Susan Morse, Senior Editor

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The Federal Trade Commission has moved to block a proposed merger of Advocate Health Care Network and NorthShore University HealthSystem, a decision the Chicago providers said they would fight.

In an administrative complaint filed Dec. 17, the FTC said the new Advocate NorthShore Health Partners would operate the majority of the hospitals in the North Shore of Chicago and control more than 50 percent of the general acute care inpatient hospital services in the area.

The merger would decrease competition, drive up prices for consumers, and lessen incentives for the health systems to upgrade their services and improve quality, the FTC said.

[Also: Tracking 2015 mergers and acquisitions]

It would eliminate the robust competition between them for inclusion in health insurance companies' hospital networks, according to the FTC.

"This merger is likely to significantly increase the combined system's bargaining power with health plans, which in turn will harm consumers by bringing about higher prices and lower quality," said Debbie Feinstein, director of the FTC's Bureau of Competition.

The health systems said in a joint statement that the merger would create a new model of care to lower consumer costs and improve quality.

Both remain committed to moving forward and intend to oppose the administrative complaint filed by the FTC, they said.

[Also: FTC blocks merger of two West Virginia hospitals]

"We believe that by bringing together our two organizations, we will lower costs, enhance care and expand access while driving innovation," said Mark Neaman, NorthShore president and CEO.

Advocate President and CEO Jim Skogsbergh said the systems started the merger process 15 months ago.

"We laid out a detailed roadmap with the FTC on our plans to advance the delivery of care, improve quality and reduce cost," Skogsbergh said.  "Our commitment to elevate the model of care with new thinking requires an openness to new approaches in this fast and evolving marketplace."

The FTC, by unanimous vote, is seeking a temporary restraining order and a preliminary injunction in federal court to prevent the merger, and to maintain the status quo pending an administrative trial scheduled for May 25, 2016.

Advocate and NorthShore are close competitors with a history of upgrading medical facilities, investing in new technologies, and adjusting their approach to managed care contracting to compete against each other, according to the complaint. Any potential cost savings and quality improvements, however, outweigh the likely competitive harm resulting from the merger, the FTC said in the complaint.

This action is the FTC's third challenge to a proposed hospital merger in recent weeks. The agency has also taken action to stop Cabell Huntington Hospital's acquisition of St. Mary's Medical Center in the Huntington, West Virginia area; and Penn State Hershey Medical Center's merger with the PinnacleHealth System in the in the Harrisburg, Pennsylvania area, according to the FTC.

Twitter: @SusanJMorse