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FTC appeals hospital merger loss

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The Federal Trade Commission will appeal a judge's decision to allow a merger between two Chicago-area health systems, the FTC said in court filings Wednesday.

The FTC didn't waste any time deciding to appeal. A federal judge Tuesday denied the FTC's request for a preliminary injunction to temporarily stop a merger between Advocate Health Care and NorthShore University HealthSystem. The judge said the FTC hadn't proved it was likely to win its overall case against the merger on its merits.

An FTC spokeswoman declined to comment. Representatives for Advocate and NorthShore did not immediately comment.

But Advocate CEO Jim Skogsbergh told Modern Healthcare Tuesday that if the FTC appealed, the systems would continue to fight for their deal.

Downers Grove, Illinois-based Advocate already is the largest hospital network in Illinois with 12 hospitals, and NorthShore University HealthSystem is an Evanston, Illinois-based four-hospital network. The hospital networks had a total of $7.16 billion in annual revenue in 2014.

The FTC in December took its case to court, alleging the marriage would “substantially lessen competition and cause significant harm” to consumers by increasing health care costs. The new system, which would be called Advocate NorthShore Health Partners, would create the 11th largest nonprofit hospital network in the nation and command about 60% of hospital services in Chicago's northern suburbs, the FTC alleges.

Advocate and NorthShore say the FTC wrongly defined their market, that their North Shore market share is closer to nearly 30%, and that they would save consumers up to $1.1 billion a year with a new health insurance plan.

The FTC's appeal isn't entirely unexpected. The FTC is already challenging an earlier, similar loss in a case over a merger between two Pennsylvania health systems.

The two consecutive losses were relatively rare setbacks for the FTC, which had otherwise been on a winning streak in hospital merger cases in recent years.

Experts say the judge's decision this week could ease fears among hospitals nationwide that have put merger talks on ice as they awaited the outcome of this case.

Kristen Schorsch of Crain's Chicago Business contributed to this report.

Lisa Schencker writes for Modern Healthcare, a sister publication of Business Insurance.