Dive Brief:
- The FTC challenged the merger of Advocate Health Care with NorthShore University HealthSystem, stating it would reduce competition and harm consumers.
- In the process of filing its suit, the agency subpoenaed several hospitals for confidential information related to their business plans, pricing, and forecasts. Advocate and NorthShore negotiated a confidentiality agreement where one executive from each hospital would have access to that data.
- However, the other hospitals that submitted their data objected to this arrangement and wanted to restrict data access to outside lawyers. U.S. Magistrate Judge Jeffrey Cole agreed in his ruling that Advocate's and NorthShore's access to the data will be limited to one outside-counsel member per hospital.
Dive Insight:
The FTC stated in December 2015 when it filed its lawsuit to block the hospital merger the two hospitals would dominate more than half of inpatient services in Chicago's "North Shore" area. The dispute seems to stem from the definition of the regional market. The two hospitals claimed they operate in a six-county market with 75 hospitals, and if they merged they would have a total of 22% of the area's inpatient beds.
The other hospitals which submitted confidential information -- Northwestern Memorial, University of Chicago, Rush Univeristy Medical Center, Presence Health and Amita Health -- balked at the original confidentiality agreement because research on the NorthShore's and Advocate's two executives LinkedIn profiles showed they were involved in strategic planning and business development.
Judge Cole rejected the two executives appointed to review the data and acknowledged the risk of disclosure on confidential data. However, he added, "That risk is one that a party must...endure. But, it is not one that a nonparty ought to be forced to take where the party is seeking the information is the foremost competitor and there appear to be alternative sources of information. The inescapable reality is that once an expert -- or a lawyer for that matter -- learns the confidential information that is being sought, that individual cannot rid himself of the knowledge he has gained; he cannot perform a prefrontal lobotomy on himself, as courts in other context have recognized."
It will be interesting to see if this ruling makes an impact on future hospital mergers.