- Executives at Advocate Health Care and Northshore University Health System said Tuesday they are calling off their merger after U.S. District Judge Jorge Alonso ruled against it, the Chicago Tribune reported.
- After the judge originally ruled for the merger that was first proposed in September 2014, the Federal Trade Commission (FTC) appealed and the 7th U.S. Circuit Court of Appeals agreed with the federal agency, sending the case back to Alonso for reconsideration.
- The latest court ruling was not made public Tuesday but the FTC argued that a merger of the two Chicago-area systems would increase costs and decrease the quality of care.
The decision is a blow for health systems looking to consolidate. The Advocate-Northshore merger would have created the largest nonprofit health system in Illinois with 16 hospitals, 4,000 beds and 45,000 employees treating more than 3 million patients annually.
While hospitals and health systems across the U.S. have argued that the ACA has encouraged them to pursue merger and acquisition opportunities, the substantial increase in consolidation in healthcare following the implementation of the law prompted federal and state government to step in. The goal with blocking these deals has been to prevent decreased access to care and competition, as well as increased prices to consumers. The FTC watches deal plans for physician consolidation and geographic market issues. Healthcare consolidation decreased last year, a report from the PricewaterhouseCooper's Health Research Institute shows.
Advocate, Illinois’ largest health system, contended in court that the FTC wasn’t correctly estimating the market impact. “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," Tad Lipsky, acting Director of the FTC's Bureau of Competition, said in a statement.
In September 2016, an FTC official contended that merger transactions aren’t needed to work on population health issues because they can be done on a smaller scale. On the other hand, the American Hospital Association recently argued that some hospitals mergers have led to cost savings and quality improvements.