Jefferson Health and Einstein Healthcare merger moves forward after FTC withdraws challenge

The merger between Pennsylvania-based Jefferson Health and Einstein Healthcare Network can now close after the Federal Trade Commission voted to withdraw its opposition to the deal, Jefferson Health announced this week.

The deal is now expected to be finalized within the next six months.

Earlier this year, the FTC voted 4-0 to voluntarily dismiss its appeal to the Third Circuit of the district court, according to the commission's case summary.

Once the deal is complete, Jefferson's network of hospitals will grow to 18 with the addition of Einstein's three general acute care hospitals and an inpatient rehabilitation hospital.

WHY IT MATTERS

Merger plans were first announced in 2018 in a deal estimated to be worth $599 million.

The FTC initially blocked the merger because it believed it would reduce competition in the Philadelphia and Montgomery counties.

It alleged the deal would give the two health systems control of at least 60% of the inpatient general acute care hospital services market in North Philadelphia, at least 45% of that market in Montgomery County, and at least 70% of the inpatient acute rehabilitation services market in the Philadelphia area.

But late last year, a federal judge blocked the FTC's attempt to stop the merger. Judge Gerald Pappert of the U.S. District Court for the Eastern District of Pennsylvania wrote that the FTC failed to demonstrate that there's a credible threat of harm to competition. He pointed to other competitors in the region, such as Penn Medicine, Temple Health and Trinity Health Mid-Atlantic.

The FTC and the Commonwealth of Pennsylvania attempted to appeal the court's decision, but after Jefferson and Einstein filed a motion to withdraw the case, the commission unanimously voted to drop its appeal.

THE LARGER TREND

The FTC is taking a closer look at healthcare mergers and acquisitions to better understand how physician practice and healthcare facility mergers affect competition. Earlier this year, it sent orders to Aetna, Anthem, Florida Blue, Cigna, Health Care Service Corporation and United Healthcare to share patient-level claims data for inpatient, outpatient and physician services across 15 states from 2015 through 2020.

Although M&A activity was down in 2020 due to the COVID-19 pandemic, Kaufman Hall called the 79 transactions that did take place "remarkable" for falling within the range of the 92 deals from the year before.

The analysts expect activity to ramp up moving forward, however. They predict that as health systems evaluate their business strategies post-pandemic, those in strong positions will take advantage of other systems' divestitures to grow their capabilities and expand into new markets.

ON THE RECORD

"We are excited to have Einstein and Jefferson come together, as our shared vision will enable us to improve the lives of patients, the health of our communities and enhance our health education and research capabilities," said Ken Levitan, the interim president and CEO of Einstein Healthcare Network.

"By bringing our resources together, we can offer those we care for – particularly the historically underserved populations in Philadelphia and Montgomery County – even greater access to high-quality care."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org