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Proposed Merger Of 2 Philadelphia-area Hospitals Challenged

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The Federal Trade Commission said it will challenge the proposed merger between two Philadelphia-area hospital systems as the deal could reduce competition, resulting in raised prices in both Philadelphia and Montgomery counties.

The FTC issued an administrative complaint to block the proposed merger of Jefferson Health and Albert Einstein Healthcare Network. The two are leading providers of inpatient general acute care hospital services and inpatient acute rehabilitation services in the Philadelphia and Montgomery counties, Pennsylvania.

Both hospitals had agreed to merge in September 2018, whereby Jefferson would become the sole member and ultimate parent entity of Einstein.

If the deal is concluded, the combined entity would be operating 14 inpatient general acute care or GAC hospitals, including 11 in Pennsylvania, and eight inpatient rehabilitation facilities or IRFs in Pennsylvania.

The FTC noted that the transaction would make Jefferson, already the largest health system by hospital beds in the greater Philadelphia region, even larger with over 1,000 more hospital beds than the next largest health system in the greater Philadelphia region.

The complaint alleges that if allowed to merge, the two hospital systems would control at least 60 percent of the inpatient GAC hospital services market in and around North Philadelphia, and at least 45 percent of that market in and around Montgomery County.

Collectively, Jefferson and Einstein also operate six of the eight IRFs in the Philadelphia area in and around Einstein's flagship Moss at Elkins Park facility. Following the merger, the two companies would control at least 70 percent of the IRF services market in the Philadelphia area.

The FTC and the Pennsylvania Attorney General will jointly file a complaint in federal district court.

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