Regulators challenge merger of Philadelphia health networks

February 27, 2020 GMT

PHILADELPHIA (AP) — The Federal Trade Commission said Thursday it is taking action to block the planned merger of two major Philadelphia-area health systems, saying it would reduce competition and harm patients.

The commission issued an administrative complaint and said it is also filing a complaint in federal court to prevent the merger between Jefferson Health and Einstein Healthcare Network. The Pennsylvania attorney general’s office joined the FTC’s effort.

“Patients in the Philadelphia region have benefited enormously from the competition between the Jefferson and Einstein systems,” Ian Conner, director of the FTC’s Bureau of Competition, said in a written statement. “This merger would eliminate the competitive pressure that has driven quality improvements and lowered rates.”


But U.S. Rep. Dwight Evans, D-Philadelphia, called the effort to block the merger “outrageous,” arguing a combined health system would strengthen hospital finances and preserve access. He noted last year’s closure of Hahnemann University Hospital, which treated many poorer Philadelphians, after its parent company filed for bankruptcy.

“Hahnemann is the canary in the coal mine,” Evans said at a House committee hearing Thursday.

The companies said in a joint statement that they are reviewing the challenge but that a merger would preserve patients’ access to healthcare.

“We believe we have presented a strong and comprehensive case as to how the merger would benefit the patients we serve and advance our academic mission without reducing competition for healthcare services,” the statement said. “At a time when regional and national politicians and leaders are seeking ways to better support essential safety net hospitals, we see this merger as a creative solution to preserve access and enhance services to the residents of North Philadelphia.”

Attorney General Josh Shapiro, a Democrat, argued in a statement that the proposed merger doesn’t do enough to ensure the stability of Einstein Medical Center “as a key, full-service care provider for the people of north Philadelphia,” nor go far enough to maintain competition in the suburbs.

Jefferson has grown substantially in recent years and now has 14 hospitals. Einstein runs three hospitals.

If permitted to merge, the combined health system would control at least 60% of general acute-care hospital services in and around north Philadelphia, and at least 45% of the market in and around suburban Montgomery County, the complaint alleged. A merged health system would also control 70% of inpatient acute rehabilitation services in the Philadelphia area, the complaint said.

An administrative trial has been scheduled for Sept. 1.

Jefferson and Einstein announced the proposed merger in 2018.