Penn State, PinnacleHealth drop merger after appeals court loss
Penn State Hershey (Pa.) Medical Center and PinnacleHealth System, Harrisburg, Pa., abandoned their proposed merger in the wake of renewed regulatory opposition from the Federal Trade Commission.
In September, the 3rd U.S. Circuit Court of Appeals revived the FTC’s antitrust challenge to the proposed hospital merger, paving the way for an administrative trial probing the alleged anticompetitive effects of the deal. Rather than endure a long, costly battle with regulators, the central Pennsylvania health systems terminated their agreement.
“We firmly believe the integration of our two health systems would have served the best interests of patients and the entire central Pennsylvania community,” the systems said in a statement. “Where circumstances allow and where it makes the most sense for our patients, we will continue to collaborate in the future.”
Penn State and PinnacleHealth initially triumphed against federal regulators’ concerns over the merger. In May, a Pennsylvania federal judge rejected the FTC’s case and said patients wouldn’t be harmed by the proposed consolidation. But then the 3rd Circuit overturned that analysis, finding insurers wouldn’t be able to create a competitive health plan for the Harrisburg market without Penn State-PinnacleHealth providers in their networks.
Penn State Hershey Medical Center will still explore opportunities to collaborate.