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PinnacleHealth, Penn State Hershey call off merger: 6 things to know

Penn State Milton S. Hershey (Pa.) Medical Center and Harrisburg, Pa.-based PinnacleHealth System have abandoned their plan to merge due to the time and cost of continuing to fight the Federal Trade Commission.

Here are six things to know about the transaction.

1. Hershey Medical Center and PinnacleHealth announced their merger plan last June. In December, the FTC and Pennsylvania Attorney General Kathleen Kane objected to the proposed integration of the two organizations.

2. In the complaint opposing the transaction, the FTC and the attorney general said the merged entity would control approximately 64 percent of the hospital market in Dauphin, Cumberland, Perry and Lebanon counties, which would likely lead to increased healthcare costs and reduced quality of care for local residents.

3. During a week-long trial in April, Pinnacle and Hershey argued the deal is about attaining efficiencies and fending off encroachment from systems outside the immediate area. Antitrust regulators argued the combined entity would have a monopoly and insurers would be forced to meet Hershey-Pinnacle's requests for higher reimbursements if the merger goes through.

4. In May, Judge John E. Jones III issued a 26-page ruling, denying the FTC's motion for a preliminary injunction. The judge found the FTC failed to meet its burden to show it was likely to ultimately succeed on the merits of its antitrust claim. The FTC appealed the ruling. 

5. On Sep. 27, the U.S. Court of Appeals for the Third Circuit issued a decision that reversed Judge Jones' ruling. Under the decision issued by the three-judge appeals panel, the lower court issued an injunction preventing the Hershey-Pinnacle merger from moving forward pending the outcome of an administrative hearing on the transaction. 

6. Pinnacle and Penn State Hershey officials said they are disappointed by the appeals court's decision. "We firmly believe the integration of our two health systems would have served the best interests of patients and the entire central Pennsylvania community," the systems said in a statement released Friday. "But given the time and cost associated with continuing litigation, Pinnacle Health and the Milton S. Hershey Medical Center have decided to bring our integration efforts to a close."

More articles on healthcare industry transactions:

Prospect Medical Holdings acquires Waterbury Hospital
Northwell Health purchases Eastern Suffolk Cardiology
21 recent hospital transactions and partnerships



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