As Evanston Northwestern Healthcare gathers evidence for the appeal of a recent court ruling that voided its 2000 merger with Highland Park Hospital, the suburban Chicago system will have support of the nation’s largest hospital trade group, among others.
The Chicago-based American Hospital Association has filed a friend-of-the-court brief backing Evanston Northwestern in its appeal before the Federal Trade Commission. A date for the appeal before the five-member commission has not been set.
In a landmark ruling in October, Chief Administrative Law Judge Stephen McGuire, who presides over a court at the FTC, directed Evanston Northwestern to sell Highland Park Hospital, separating it from others it owns in Evanston and Glenview. McGuire ruled that the merger led to unfair price hikes and violated antitrust laws.
Now Evanston Northwestern’s supporters are weighing in through the appeal process. Among others who have filed amicus curiae, or friend-of-the-court, briefs are: the Business Roundtable, an association of Chicago-area chief executives; the City of Highland Park; and the Advisory Board, a health-care research group.
Evanston Northwestern and the hospital association don’t believe the judge took into consideration appropriate market share data, among other things.
The judge’s decision relied heavily on the use of pricing data submitted by insurance companies, Evanston Northwestern and hospital association attorneys say. In his ruling, the judge pointed to testimony from one expert witness that compared Evanston Northwestern’s pricing with control groups of hospitals and found that across all managed-care plans price increases exceeded the control groups’ hikes by 11 percent to 18 percent. If other hospitals increased prices by 10 percent, Evanston Northwestern raised them by 21 percent to 28 percent, the judge wrote.
Neither the FTC nor its staff attorneys would comment on the pending appeal or its legal strategy going forward.
The hospital association said the administrative law judge’s ruling bucked legal precedents set in earlier antitrust cases lodged against hospitals by the FTC or the U.S. Department of Justice during the last decade. Those agencies lost a combined seven cases challenging hospital mergers in the 1990s.
Despite hospitals’ past successes, the hospital association said it is worried because its attorneys believe McGuire did not rely on market share data for his ruling in the Evanston Northwestern case as judges did in earlier cases that hospitals won. Hospitals have long fought off antitrust allegations by showing that their facilities draw patients from wide regions and therefore have ample competition in their markets.
A successful appeal is important to the U.S. hospital industry, especially while the health insurance industry gains more clout as more health plans consolidate into larger players.
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“There is a tremendous amount at stake for all hospitals,” said Melinda Hatton, chief Washington counsel for the hospital association. “[McGuire] has changed the rules dramatically. There are no rules if you follow his decision.”
If Evanston Northwestern does not win its appeal before the FTC, it is expected to challenge McGuire’s decision in a federal appeals court, likely the 7th Circuit in Chicago.
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