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On March 1, 2021, the Federal Trade Commission (FTC) abandoned its effort to halt the $599 million merger of two Philadelphia-area hospital systems, Jefferson Health (Jefferson) and Albert Einstein Healthcare Network (Einstein). The FTC’s decision comes on the heels of the Pennsylvania Attorney General’s withdrawal from the case, and the U.S. Court of Appeals for the Third Circuit’s refusal to stay the deal while the FTC appealed its initial loss in the trial court. Before this, the FTC had not lost a challenge to a hospital or provider merger in 20 years. The case imparts significant antitrust lessons for hospitals and providers considering a future acquisition or sale.
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The U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”), in the span of about 48 hours in the first days of March, wrapped up two challenges to hospital deals – one dropped, the other settled (pending court approval). Both outcomes should be viewed as important indicators of both the issues the enforcement agencies are likely to focus on in health care industry deals and why market definition is particularly critical in health care market transactions.
The Philadelphia Case
On Monday, March 1, the FTC announced that it was walking away from its year-old challenge to the pending merger of the Philadelphia-area Jefferson Health (“Jefferson”) and Albert Einstein Healthcare Network (“Einstein”). The case was filed in February 2020, and the FTC was joined by the Pennsylvania Office of Attorney General (“PA-AG”). The FTC and PA-AG, unsuccessfully, sought a preliminary injunction
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After a years-long run of successfully challenging hospital mergers, the Federal Trade Commission (“FTC”) has voted to withdraw an appeal related to its attempt to block the merger of two healthcare providers in the greater Philadelphia area, Jefferson Health (“Jefferson”) and Albert Einstein Healthcare Network (“Einstein”). The FTC initially brought this action against Jefferson and Einstein in February 2020, claiming the transaction would reduce competition.[i]
In December 2020, the Eastern District of Pennsylvania refused to grant the FTC’s request for a preliminary injunction to enjoin the merger until the resolution of an administrative proceeding to determine the merits of the case.[ii] The court found that the FTC had not met the burdens required to establish its case and denied its request.[iii] The FTC appealed to the Third Circuit and filed an Emergency Motion for an Injunction Pending Appeal.[iv]
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On Monday morning, the Federal Trade Commission quietly added a sentence to its web page dedicated to the Commission s challenge of a proposed merger of two health systems in Philadelphia s northern suburbs, Thomas Jefferson University and the Albert Einstein Healthcare Network:
The Commission vote to voluntarily dismiss its appeal to the 3rd Circuit of the district court decision declining to preliminarily enjoin the merger of Thomas Jefferson University and Albert Einstein Healthcare Network was 4-0.
The unanimous decision etches in stone that for the first time in the 21st Century the FTC has abandoned litigation to enjoin a hospital merger after failing to obtain a preliminary injunction from the district court.
Mar 5, 2021 1:00pm
The FTC announced it was investigating a proposed merger between Atrium Navicent and Houston Healthcare before the deal collapsed late last month. (Getty/Kritchanut)
The Federal Trade Commission was investigating a proposed merger between Atrium Health Navicent and Houston Healthcare System, which was called off late last month.
The agency disclosed that it was investigating the deal between two Georgia systems and had determined that it would have harmed prices and quality had the merger gone through. The investigation, which is now closed, is the latest by the agency into hospital deals.
“The proposed transaction threatened to increase healthcare costs for employers and patients in the region and would have substantially lessened competition that has benefitted the community through expansion of healthcare services and improved quality of care,” said FTC Acting Chairwoman Rebecca Slaughter in a statement on Wednesday.