FTC filing suit to block Jefferson Health from acquiring Einstein

Einstein Medical Center in Philadelphia. (John George/Philadelphia Business Journal)

Einstein Medical Center in Philadelphia. (John George/Philadelphia Business Journal)

This article originally appeared on Philadelphia Business Journal.

Federal regulators said Thursday they will seek to block Jefferson Health’s proposed acquisition of Einstein Healthcare Network, saying the deal will hinder competition in both Philadelphia and Montgomery counties.

The Federal Trade Commission, jointly with the Pennsylvania Attorney General, said it has been authorized to file a lawsuit in federal district court.

Jefferson, a regional health care powerhouse, and Einstein Healthcare Network agreed in early 2018 to merge the two nonprofit health systems. The combination would create a health system with more than 38,800 employees, 18 hospitals and more than 60 outpatient care and urgent care centers along with a combined teaching program with 2,000 residency slots.

“Patients in the Philadelphia region have benefitted enormously from the competition between the Jefferson and Einstein systems,” Ian Conner, director of the FTC’s Bureau of Competition, said in a statement. “This merger would eliminate the competitive pressure that has driven quality improvements and lowered rates.”

The FTC said it has authorized staff to seek a temporary restraining order and a preliminary injunction in federal district court to prevent the parties from consummating the merge.

In a joint statement, Jefferson and Einstein said it will review the challenge and determine how to best proceed.

“We believe we have presented a strong and comprehensive case as to how the merger would benefit the patients we serve and advance our academic mission without reducing competition for healthcare services,” the statement said. “At a time when regional and national politicians and leaders are seeking ways to better support essential safety-net hospitals, we see this merger as a creative solution to preserve access and enhance services to the residents of North Philadelphia.”

Jefferson and Einstein have shared a two-decades-long academic affiliation. Einstein Medical Center Philadelphia has long been the largest independent academic medical center in the region, annually training more than 3,500 health professional students and 400 residents in more than 30 accredited programs.

Since Jefferson CEO Dr. Stephen K. Klasko took on the job in late 2013, the health system has grown from three to 14 hospitals through the additions of Abington Health in Montgomery County, Aria Health in Northeast Philadelphia and Bucks County, Magee Rehabilitation Hospital in Center City, and Kennedy Health System in South Jersey. It also merged Thomas Jefferson University with Philadelphia University. Those health system deals did not involve the exchange of money for assets, but instead were structured as mergers of equals where the goal was to bring advanced health services closer to patients in their communities.

The Jefferson system now has 32,000 employees, generates more than $5 billion in annual revenue and recorded a $51M operating income in fiscal 2019.

In late December, it entered into a binding agreement with Temple University under which Jefferson will acquire Fox Chase Cancer Center and Temple’s bone marrow transplant program.

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