Wall Street Journal Examines Efforts by Federal Trade Commission To Void 2000 Hospital Merger
The Wall Street Journal on Monday examined efforts by Federal Trade Commission officials to target "what they say is an elusive culprit contributing to the soaring hospital costs of recent years: mergers." On Feb. 10, a trial will begin in an "unusual case" in which FTC will attempt to "undo the January 2000 takeover of Highland Park Hospital by Evanston Northwestern Healthcare," the Journal reports.
FTC has accused Evanston Northwestern of antitrust violations and alleges that the not-for-profit hospital system has used "postmerger 'market power' to impose huge price increases -- of 40% to 60%, and in one case 190% -- on insurers and employers," according to the Journal.
"The FTC sees the antitrust effort as a potentially powerful force in reining in health costs," and a victory for the agency in the case "could send a signal to big hospital systems that Evanston-type mergers are likely to face stiffer challenges and could even be blocked," the Journal reports. However, the Journal reports, an FTC loss "could be a green light for similar mergers around the U.S. to accelerate at a time when they are already on the rise."
According to the Journal, FTC "must prove that undoing the merger is worth the pain and expense involved" and must "rule out other explanations" for price increases, both of which could prove difficult. Chul Pak, an FTC attorney, said, "We believe the cases we bring are strong and meritorious, but there's no slam dunk in any litigation."
According to the Journal, "It's a high-stakes case for the FTC, which is trying to reassert an aggressive stance toward hospital mergers after it and the Justice Department lost a combined seven consecutive cases challenging proposed mergers in the 1990s" (Wysocki, Wall Street Journal, 1/17).