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.