Mid-Atlantic Health Law TOPICS

On November 1, 2013, a federal court approved an agreement between Pennsylvania Attorney General Kathleen G. Kane and Geisinger Health System Foundation regarding Geisinger's acquisition of Lewistown Hospital and its employed physician group.

Geisinger is the non-profit parent of five hospitals, a multi-specialty physician group practice with more than 1,000 primary and specialty care physicians, and Geisinger Health Plan.

In its antitrust complaint, the Pennsylvania Attorney General claimed that Geisinger's acquisition of Lewistown Hospital and its employed physician group would substantially lessen or eliminate competition in Mifflin and Juniata counties in Pennsylvania in regard to primary care physician services and primary and secondary inpatient acute care hospital services.

With respect to the market for primary care physician services, the Attorney General claimed that Geisinger would control nearly 70 percent of the market after the merger. With respect to the market for primary and secondary inpatient acute care hospital services, the Attorney General suggested that Geisinger would control about 74 percent of the market after the merger.

A. The Eight-Year Agreement

The Attorney General and Geisinger reached a settlement, embodied in an eight-year-agreement that includes the following:

1. Arbitrary price increases for hospital and physician services are not permitted.

2. Lewistown Hospital must continue to operate as an acute care hospital for at least eight years.

3. The Lewistown-employed primary care physicians who choose to accept employment with Geisinger can leave Geisinger at any time in the two years following the merger without being subject to any restrictions on their continued practice in Mifflin and Juniata Counties.

4. Health plan contracts for Lewistown Hospital and its employed physician group must be honored for the remainder of their terms. New contracts must be negotiated in good faith within a range paid to similar hospitals and physicians.

5. Geisinger must continue its practice of not prohibiting health plans from offering health care products to consumers with different tiers of providers based on cost and/or quality. (These "tiered products" enable consumers to choose their health care services based on the cost and quality of the provider.)

When the eight-year agreement was reached, Attorney General Kane stated: "Access and price are most important to consumers when it comes to health care." She further noted that "Consumers want to be able to see their physicians and obtain quality hospital services locally, regardless of what insurance card they carry in their wallet. They also want reasonable prices for health care services."

B. Implication

Although it appears that the merger was also reviewed by the Federal Trade Commission (FTC), the Pennsylvania Attorney General took an especially active role in the review process, and the case illustrates that some states may be willing to attack health care mergers even when the FTC does not.