FTC Challenges Reading Health's Acquisition of Specialty Hospital in Pennsylvania

The Federal Trade Commission has authorized an action to block Reading (Pa.) Health System's proposed acquisition of Surgical Institute of Reading, claiming the transaction would "substantially reduce" competition in the area.

Located in Wyomissing, Pa., Surgical Institute of Reading is a for-profit, physician-owned specialty hospital. It is owned by 16 physicians and has 11 independent physicians on staff.

Non-profit Reading Health, which includes 970 physicians, agreed to acquire SIR in May. The FTC filed an administrative complaint, saying the proposed acquisition would be anticompetitive and violate the FTC Act and the Clayton Act.

Specifically, competition would be reduced in four specific markets, according to the FTC: inpatient orthopedic and surgical spine services, outpatient orthopedic and spine services, outpatient ENT surgical services and outpatient general surgical services.

In each of those markets, the FTC claims the Reading Health-SIR merger would result in combined market shares ranging from 49 to 71 percent.

The FTC, jointly with the Pennsylvania Attorney General, will file a complaint in federal district court next week seeking a preliminary injunction to stop the deal, pending an administrative trial.  The agency also issued an administrative complaint, which will initiate a proceeding to determine the legality of the transaction following a full trial before an FTC administrative law judge.

Update: Hours after this report was initially published, Reading Health terminated its planned acquisition of Surgical Institute of Reading. Read more about that development in follow-up coverage, found here.

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