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FTC Bid To Block New Jersey Hospital Merger Upheld

 |  March 22, 2022

The Federal Trade Commission won a Third Circuit ruling upholding a pause on hospital operator Hackensack Meridian Health’s acquisition of Englewood Healthcare Foundation while the agency proceeded with an administrative trial to permanently block the deal.

The antitrust regulatory agency established that “there is a reasonable probability that the merger will substantially impair competition,” according to an opinion Tuesday by a three-judge panel of the U.S. Court of Appeals for the Third Circuit.

The two New Jersey-based healthcare systems signed their merger deal, which took effect in September 2019.

Federal Trade Commission Bureau of Competition Deputy Director John M. Newman issued this statement regarding the U.S. Court of Appeals for the Third Circuit decision affirming the district court’s August 2021 decision to grant a preliminary injunction against Hackensack Meridian Health, Inc.’s proposed acquisition of Englewood Healthcare Foundation:

“Today’s win affirms the FTC’s consistent position: that patients and their families in Bergen County, New Jersey would be poorly served by this anticompetitive merger. Had it been allowed to proceed, patients would have been left with fewer alternatives for inpatient general acute care services, which likely would have driven up prices and diminished the quality of care available in the area.”

Hackensack Meridian Health would be able to demand higher rates from insurers for the combined entity’s services, which, in turn, may lead to higher insurance premiums, co-pays, deductibles, or other out-of-pocket costs for plan members, the agency argued.

After affirming that the “FTC may establish a prima facie case by showing a high market concentration based on HHI numbers alone,” the U.S. Court of Appeals decision concluded that “the District Court did not err in holding that the hospitals failed to rebut the prima facie case that the merger is likely to substantially lessen competition.”

Concentration in the healthcare industry has become a salient concern for US regulators in recent years, with increased scrutiny of deals involving local monopolies of hospital and healthcare provider systems in various regions. Authorities are concerned that this concentration may directly harm patients in various ways, from raising prices and limiting choices, to removing incentives for improving services in a particularly vital industry.

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