FTC receives support––and pushback––for interfering in hospital merger

The healthcare industry has voiced its support and pushback after the FTC sued to block a merger between two hospital systems in Philadelphia. Jefferson Health and Einstein Healthcare Network are the two systems hoping to merge, with a combined annual revenue of $5.9 billion.

Namely, several pharmacy groups––including the Alliance for Pharmacy Compounding, American Pharmacists Association, American Society of Consultant Pharmacists, National Alliance of State Pharmacy Associations and the National Community Pharmacists Association––wrote to the FTC and the Department of Justice urging more scrutiny over vertical mergers like the one between Einstein and Jefferson Health.

The groups cited the mega-merger, worth $69 billion, between CVS Health and Aetna, as well as the $67 billion deal between Cigna and Express Scripts. They also warned against the outcomes of these mergers on competition.

“This surge in vertical consolidation has essentially created an oligopoly of integrated healthcare companies controlling nearly all aspects of the healthcare and pharmacy supply chain,” the letter reads.

They also asked the agencies “to rigorously scrutinize” mergers.

However, others say the FTC’s actions are harmful to Philadelphia, which is “the poorest major city in the United States,” according to Kenneth Kaufman, chair of Kaufman Hall. The hospitals at the focus of the merger also heavily serve the poorest neighborhoods in the city, he wrote in an argument in favor of the merger. The argument was posted on the American Hospital Association’s blog.

The economic conditions of the community have placed challenges on healthcare providers in the area that may include decreasing revenue. To survive and continue to be a health safety net for Philadelphia, healthcare providers face few options, including continuing to suffer, exit their market or find a partner organization to diversify its revenue sources, according to Kaufman.

By blocking the merger, the FTC “is saying no to the financial stability of a critical community resource,” Kaufman wrote.

“With its decision to attempt to block the merger of Einstein and Jefferson, the FTC has taken this misguided approach into a new realm,” Kaufman wrote. “Now, the FTC is blocking efforts to ensure the sustainability of providing essential health care services to the most vulnerable communities. The FTC’s misguided lawsuit puts these communities at even greater risk of reduced access to health care. It is hard to imagine an effort that is more harmful to the consumers that the FTC claims to protect.”

One Pennsylvania lawmaker, Congressman Dwight Evans (D-PA) also pushed back against the FTC’s actions.

“This is an outrageous action by the Federal Trade Commission and Pennsylvania Attorney General’s Office,” Evans said in a statement. “The proposed merger would provide enhanced stability and access to high-quality care for the residents of North Philadelphia for the foreseeable future. I urge these agencies to drop this ill-considered action at once!”

Evans, who represents Pennsylvania’s third district, is also leading an effort to avoid other hospital closures after Hahnemann University Hospital in Philadelphia closed last year. He touted a commitment from HHS Secretary Alex Azar to attend a meeting as part of the effort.

“Hahnemann is the canary in the coal mine, and I am acting like Paul Revere to sound the alarm and bring together everyone who can help, to borrow an analogy from the Ways and Means chairman’s home state,” he said of the initiative.