On March 1, 2021, the Federal Trade Commission (FTC) ceased its efforts to block a $599 million health system merger in Philadelphia after losing its bid in court to stop the deal between Jefferson Health (Jefferson) and Albert Einstein Healthcare Network (Einstein).  The proposed deal would expand Jefferson from its existing 14 facilities to 18 facilities.

The FTC’s efforts to challenge the deal kicked off in February 2020, with an administrative complaint arguing that Jefferson and Einstein are two leading providers of acute care and acute rehabilitation services in their geographic area, and the merger would eliminate competition between Jefferson and Einstein for inclusion in health insurance companies’ hospital networks, to the detriment of patients.  The FTC, together with the Pennsylvania Attorney General, also sought a preliminary injunction in the federal district court to stop the merger until the completion of the administrative proceedings.  The hospitals agreed to halt the merger until one week after the federal district court ruled on the motion for a preliminary injunction. 

Hearings on the preliminary injunction began on October 1, 2020 and concluded on October 26, 2020.  The district court denied the FTC’s request for a preliminary injunction on December 8, 2020.  On December 11, 2020, the FTC (without the Pennsylvania Attorney General) filed an emergency motion for an injunction pending an appeal in the Third Circuit, which was denied on December 21.  On Monday, March 1, 2021, the FTC confirmed in its case summary that it would no longer seek to prevent the merger. 

Consolidation in the healthcare industry has been surging forward in the past decade and we expect this trend to continue and even increase in light of the COVID 19 pandemic.  At the same time, the FTC is expected to become even more aggressive in enforcement activities against healthcare deals it considers anticompetitive.   

For the moment, keep in mind the following healthcare antitrust considerations:

  • Expect increased scrutiny for healthcare mergers.  Bear in mind the FTC’s announcement in September 2020 of a revamped Merger Retrospective Program.  
  • Scrutiny will not be limited to hospital mergers.  The FTC also announced in January 2021 that it will be studying the effects of not just hospital consolidation, but physician group consolidation as well.
  • As seen in the Jefferson-Einstein merger, an FTC challenge does not necessarily mean the death of the deal, and a challenge can successfully be defeated. 

The attorneys at Chilivis Grubman assist businesses of all types and sizes in connection with mergers and acquisitions in the healthcare arena.  If you need assistance with such a matter, please contact us today.