The Federal Trade Commission is looking into effects of the 2000 merger of Evanston Northwestern Healthcare and Highland Park Hospital.
According to an FTC spokesman, who requested to remain anonymous, the investigation is part of a nationwide, fact-finding search into the effects of hospital consolidation on price and competition.
“Health care costs are something that have become a priority under Chairman (Timothy J.) Muris,” the spokesman said. Muris was appointed in June 2001.
Recently, the FTC began a process of reviewing several cases of hospital mergers across the nation to determine whether mergers have lowered the cost of health care services by consolidating resources or raised prices by lowering the number of competing hospitals.
“In this case, we’re trying to figure out if it’s broke or if it’s fixed,” the spokesman said.
Thomas Prince, professor of health industry management at NU, said he does not believe the FTC will find anything out of the ordinary.
“I don’t know why the FTC is wasting its time with Evanston Northwestern Healthcare,” Prince said.
According to Prince, such cases are difficult to prosecute because of the large percentage of health care consumers that choose hospitals outside of their communities.
Evanston Northwestern Healthcare officials declined to comment.
The FTC lost its last case against a hospital merger, because it was unable to prove that the loss of competition affected the entire area served by the hospital, rather than just a small community, Prince said. With a large percentage of North Shore residents willing to drive into Chicago for health care services, a ruling against the merger would be nearly impossible.
David Dranove, also a health industry management professor, said the likelihood of any criminal act coming to light as a result of the investigation is small.
“Any merger like that would have gone through several stages of paperwork” in accordance with the Hart-Scott-Rodino Act, Dranove said. The 1976 Act, which President Clinton amended in 2000, requires investors to notify the federal government when seeking a stake with a value of at least $50 million. Investors then are subject to a 30-day review period.
At the time the FTC did not attempt to block the merger, Dranove said.
But this does not mean the investigation is simply a bureaucratic review of old information, he said. Dranove pointed out that “research shows that mergers do not provide significant cost savings.”
Although he would not comment on this specific investigation, Dranove said of the trend, “Newer theories and newer evidence have led the FTC to look into some hospital mergers, and this is one that they’ve chosen to investigate.”
