Blue Cross comes out against Advocate-NorthShore merger

An executive at Chicago-based Health Care Service Corp., which operates Blue Cross plans in Illinois and four other states, told a court Tuesday that the proposed merger between Downers Grove, Ill.-based Advocate Health Care and Evanston, Ill.-based NorthShore University HealthSystem could be bad for the Chicago area.

Steve Hamman, senior vice president of provider engagement and enterprise network solutions at HCSC, served as one of the Federal Trade Commission's witnesses in a hearing this week to block the proposed merger.

Under questioning from the FTC, Mr. Hamman said the combined system would have more leverage with payers that sell plans in the Chicago area and more bargaining power "typically manifests itself in higher prices for services," according to the Chicago Tribune.

Mr. Hamman's testimony supported the FTC's argument that the merger would lead to higher healthcare costs for consumers and diminish incentives for the combined entity to upgrade services and improve quality.

However, under cross-examination it became clear Blue Cross has another reason to oppose the merger. The insurer is also worried that after the merger, Advocate and NorthShore would create their own health insurance company, according to the report.

In a court document made public in late March, Advocate and NorthShore 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.

More articles on antitrust issues:

NorthShore lawyer: Why doesn't FTC include Northwestern in definition of Chicago's competitive market?
FTC suspends challenge of West Virginia hospital merger
Antitrust lawsuit against Premier Health heads back to lower court

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