Chicago-area sys­tems Ad­vo­cate, NorthShore drop plans to merge

Modern Healthcare - - REGIONAL NEWS - —Brigid Sweeney, Crain’s Chicago Busi­ness

A fed­eral judge last week ruled against the pro­posed union be­tween Ad­vo­cate Health Care and NorthShore Univer­sity HealthSys­tem, lead­ing the two Chicago-area hospi­tal sys­tems to an­nounce that they will not con­tinue their merger ef­fort.

NorthShore CEO Mark Nea­man wrote in a memo to em­ploy­ees that the time, cost and un­cer­tainty of pur­su­ing an ap­peal would not be worth­while.

Ex­perts be­lieve the de­ci­sion will have a chill­ing ef­fect on big merg­ers na­tion­wide.

“It cer­tainly says that merg­ers of large sys­tems that would cre­ate mar­ket power above a cer­tain mar­ket share will re­ceive sig­nif­i­cant scru­tiny,” says Al­lan Baum­garten, an in­de­pen­dent con­sul­tant in Min­neapo­lis who stud­ies hospi­tal mar­kets.

Through­out their merger ef­forts, NorthShore and Ad­vo­cate ar­gued that join­ing forces would lower prices for con­sumers by cre­at­ing re­newed com­pe­ti­tion among in­sur­ers bid­ding for the hos­pi­tals’ busi­ness.

The Fed­eral Trade Com­mis­sion dis­agreed, stat­ing that any sav­ings would be short-term and that con­sumers would ul­ti­mately pay more for health­care.

In his memo, Nea­man said the rul­ing and the FTC’s per­spec­tive demon­strate “that in­surance com­pa­nies’ needs take prece­dent over di­rect ben­e­fits to con­sumers.”

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