Jonathan Bilyk Jun. 14, 2016, 12:33pm

A Chicago federal judge has opted not to step in to block the proposed merger between Advocate and NorthShore University health systems, saying he does not believe federal regulators who oppose the deal will succeed in their antitrust legal action.

On June 14, U.S. District Judge Jorge Alonso issued a short order in which he denied the request by the Federal Trade Commission for a preliminary injunction to bar the two operators of Chicago area hospitals and other health care facilities.

“After a six-day hearing and consideration of the parties’ evidentiary submissions and arguments, the Court finds that plaintiffs have not met their burden of showing that there is a likelihood that they will succeed on the merits of their antitrust claims,” Alonso wrote.

The judge said he had prepared a more detailed memorandum opinion to accompany the order and explain his decision. But Alonso said he would delay releasing those documents until after “the parties” involved in the legal action could “meet and confer” over how to properly redact “competitively sensitive information” contained in Alonso’s opinion.

The judge ordered the various parties to submit “proposed redactions” by noon on Friday, June 17.

The decision comes as a major blow to the FTC’s effort to block the merger, one of the largest such mergers ever challenged by federal regulators, and a rare loss for the FTC, which had prevailed against other large hospital system merger deals, including successfully blocking a bid by OSF Healthcare to acquire the Rockford Health System four years ago.

However, the FTC did suffer a similar loss about a month ago, when a federal judge in Pennsylvania also declined to grant the agency’s request for a preliminary injunction to block a hospital merger deal northwest of Philadelphia in the area around Harrisburg, Pa.

Downers Grove-based Advocate, Illinois’ largest health system company, and Evanston-based NorthShore have sought since 2014 to complete a deal to merge their two health systems, which would create a large group operating 17 hospitals in and around Chicago and elsewhere in Illinois.

The FTC, however, and Illinois Attorney General Lisa Madigan moved to challenge the merger deal in 2015, arguing the deal would leave area patients – and particularly those in Chicago’s northern suburbs – with little to no competition for their health care dollars, which, the regulators asserted, would cause prices to rise in the region.

In response, however, Advocate and NorthShore argued the FTC had erred in its analysis of the region’s health care services market, particularly in minimizing the competition Advocate and NorthShore face against the rapidly expanding Northwestern Medicine system, which has in recent years merged with the former Cadence Health in DuPage and Kane counties, and the former KishHealth in DeKalb. Northwestern has also announced intent to merge with Centegra Health System in McHenry County.

In addition to the competition from Northwestern, Advocate and NorthShore said the FTC also discounted the price-fixing leverage held by large insurers, such as Blue Cross Blue Shield.

The two sides squared off in court for nearly a week earlier this spring, and the case drew wide interest, with a number of other Chicago health care systems and insurers intervening in the case.

NorthShore was represented in the action by attorneys with the firm of Winston & Strawn, of Chicago.

Advocate was represented by the firms of Drinker, Biddle & Reath, of Chicago, and Hogan & Hartson, of Washington, D.C.


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