The Federal Trade Commission ("FTC") initiated on January 10, 2004, an administrative challenge to a hospital merger that closed in January 2000. In January 2000, Evanston Northwestern Healthcare Corp. ("ENH"), the owner of hospitals in Evanston and Glenbrook, Illinois, and owner of ENH Faculty Practice Associates, allegedly acquired Lakeland hospital. According to the FTC complaint, all three hospitals were within a densely populated 150-mile area. The FTC alleges that the merger increased prices to eight payers by between 15 and 190 percent. The FTC alleges that the price increases demonstrate that the merger is anticompetitive and that hospital competition is not regional, but local in nature. The FTC also alleged that ENH negotiated the fees to be paid to both ENH ? employee and independent physicians. The FTC alleges that following this arrangement, physician fees increased by between 110 and 150 percent. The complaint charges that such joint negotiation was price fixing and unaccompanied by any integrative efficiency. The matter is significant to the health care industry because it signals that the FTC is focusing on mergers between local hospitals. District courts addressing such mergers generally had been finding hospital competition to be regional and concluding that mergers among local hospitals were competitively benign. ENH demonstrates that parties cannot rely on decided opinions when predicting the direction of a hospital merger investigation at the FTC.
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