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Advocate, NorthShore to offer low-cost health plan if merger goes through

Chicago-area residents may have access to a cheaper health insurance plan if the proposed merger between Downers Grove, Ill.-based Advocate Health Care and Evanston, Ill.-based NorthShore University HealthSystem is approved, according to a Crain's Chicago Business report.

In a court document filed under seal earlier this month but made public yesterday, the health systems fired back against the Federal Trade Commission's claims that the Advocate-NorthShore merger would have anti-competitive effects. The systems claim the proposed transaction will not raise healthcare prices for consumers or reduce health insurers' bargaining power, according to the report.

Advocate and NorthShore also said the merger would allow the combined system to create a new insurance product that would be priced at least 10 percent below the cheapest comparable plan on the market, according to Crain's. The proposed plan would limit access to providers in the Advocate-NorthShore system.  

The FTC is seeking a preliminary injunction to stop the merger from moving forward. In their court filing, Advocate and NorthShore argue killing the merger would harm consumers.

"If this merger is blocked, Chicagoland consumers will be harmed by losing the opportunity to save hundreds of dollars per individual in the network every year," the systems said.

Advocate and NorthShore unveiled plans in 2014 to join forces and create a new health system, which would include more than 4,000 hospital beds and employ more than 45,000 workers. Although the systems argue the merger would lead to cost savings and quality improvements, the FTC disagrees.

The FTC authorized action last December to block the pending merger, and the Illinois Attorney General joined the FTC in the matter. The two systems subsequently agreed to temporarily halt the transaction while the FTC conducts its antitrust review.

"Despite a more than yearlong investigation and the production of 2.6 million pages of documents, there are no documents and there is no testimony — zero — showing or suggesting that Advocate and/or NorthShore will raise prices as a result of the merger," said Advocate and NorthShore in the court filing.

Earlier this year, NorthShore CEO Mark Neaman accused the FTC of gerrymandering, claiming the agency is only analyzing a small portion of the Chicago area's healthcare market to challenge the proposed merger.

"First and foremost, the FTC's assumptions regarding the Chicago market are based on an antiquated product model — inpatient admissions and a completely gerrymandered area," Mr. Neaman told Becker's. "They've erased some hospitals just a couple of miles away, while ignoring that people travel across a region populated by 8 million people and 75 hospitals for care."

The systems accuse the FTC of gerrymandering in their March 18 court filing as well, according to Crain's.

The systems and the FTC will present their arguments at a federal administrative trial that is slated to begin April 6 in U.S. District Court in Chicago.

More articles on healthcare industry transactions:

UPMC gets green light to acquire Jameson Health System
Sale approved for shuttered Texas hospital
Capella, RegionalCare to merge into new $1.7B company: 10 things to know


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