The Department of Justice announced today that it has reached an agreement with Geisinger Health (Geisinger) and Evangelical Community Hospital (Evangelical) that will resolve the department’s ongoing civil antitrust litigation challenging Geisinger’s partial acquisition of Evangelical . Among other conditions, the settlement requires Geisinger to cap its stake in Evangelical at a passive 7.5% stake and remove additional tangles between the two competing hospitals.
On August 5, 2020, the Department of Justice’s antitrust division filed a civil antitrust complaint challenging Geisinger’s partial acquisition of Evangelical. The department alleged that Geisinger and Evangelical are close competitors for general hospital acute inpatient care services in a six-county region of central Pennsylvania, where the two hospital systems together account for about 70% of the market.
“Today more than ever, Americans need access to quality health care services at affordable prices,” said Richard A. Powers, Acting Assistant Attorney General, Antitrust Division. “The anti-competitive deal between Geisinger and Evangelical reduced their incentives to compete on the price, quality and availability of high-quality health services, which would have harmed patients in central Pennsylvania. Today’s regulations ensure that these patients will continue to benefit from strong competition between Geisinger and Evangelical.
According to the complaint, the partial acquisition agreement has created significant entanglements between hospitals, reducing their incentives to compete and increasing the likelihood of damaging coordination. For example, Geisinger was to obtain a 30% stake in Evangelical in exchange for providing $ 100 million to Evangelical for use on projects approved by Geisinger. These conditions would have made Geisinger an essential source of funding for Evangelical for the foreseeable future and would have enabled Geisinger to influence the strategic decisions of its competitor. The agreement also gave Geisinger rights of first offer and first refusal for certain transactions and joint ventures, which, along with other provisions of the agreement, would have made it difficult for Evangelical to partner with others. health care entities. The department alleged that the provisions of the partial acquisition agreement worked together to significantly lessen competition and unreasonably restrict trade in the inpatient hospital services market in central Pennsylvania.
If approved by the court, the proposed settlement, filed today in the United States District Court for the Middle District of Pennsylvania, would resolve the competitive prejudice alleged in the lawsuit. The terms of the settlement are intended to prevent Geisinger from exercising any form of control or influence over Evangelical and to restore defendants’ incentives to compete on both quality and price. In addition to capping Geisinger’s stake in Evangelical, the proposed settlement prevents Geisinger from increasing its stake in Evangelical, granting a loan or providing a line of credit to Evangelical, or exerting control over expenses of Evangelical. Evangelical. Defendants are also required to implement an antitrust compliance program.
While fully addressing the prejudice threatened by the partial acquisition agreement, the settlement allows the pro-competitive aspects of the defendants’ proposal to move forward. Specifically, the settlement allows Evangelical to obtain from Geisinger new electronic health record computer systems and related IT support, enabling Evangelical to upgrade its electronic health record systems and improve the delivery of care. to patients in central Pennsylvania. The settlement also requires Evangelical to use funds associated with Geisinger’s passive investment for specific projects that will benefit patients and the community.
Geisinger is an integrated regional health care provider of hospital and physician services in Pennsylvania. It operates 12 hospitals as well as emergency care centers and outpatient departments, and has medical offices throughout Pennsylvania. Its flagship hospital, Geisinger Medical Center, is a 574-bed hospital located in Danville, Pennsylvania. Geisinger Health’s annual revenue in 2019 was approximately $ 7.1 billion.
The Evangelical Community Hospital is a 132-bed independent community hospital located in Lewisburg, Pennsylvania. It also operates an emergency care center and several other outpatient care facilities, and has a number of physician offices in central Pennsylvania. Its annual revenue in 2019 was approximately $ 259 million.
As required by the Tunney Act, the proposed regulation, together with a competition impact assessment, will be published in the Federal Register. Anyone may submit written comments regarding the proposed settlement during a 60-day comment period to Eric Welsh, Health and Consumer Products Section Head, Antitrust Division, US Department of Justice, 450 Fifth Street NW, Suite 4100, Washington, DC 20530. At the end of the 60 day comment period, the United States District Court for the Central District of Pennsylvania may render the final judgment if it considers it to be in the best interests. public.
The claims resolved by the settlement are only allegations and there has been no determination of liability.