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Analysis

Geisinger Health 'Disappointed' in DOJ's Move to Block PA Hospital Acquisition

By Melanie Blackman  
   August 07, 2020

The partnership between Geisinger Health and Evangelical Community Hospital was first announced in October 2018.

The U.S. Department of Justice has sued Pennsylvania-based Geisinger Health to block a partial acquisition of Evangelical Community Hospital on the grounds of antitrust laws.

The DOJ's complaint alleges that the agreement between Geisinger Health and Evangelical Community Hospital "alters the relationship between the parties," and reduces competition in the state.

According to a statement released on Wednesday from the DOJ, "the transaction is likely to lead to higher prices, lower quality, and reduced access to high-quality inpatient hospital services for patients in central Pennsylvania."

The two organizations are "close competitors" in Pennsylvania for acute-care hospital services, and together they make up approximately 71% of the healthcare market in central Pennsylvania. The acquisition would give Geisinger Health 30% ownership of Evangelical Community Hospital, investing $100 million.

"Preserving competition in healthcare markets is a priority for the Department of Justice because of its important impact on the health and well-being of Americans," said the DOJ's Antitrust Division Assistant Attorney General Makan Delrahim in the statement. "This agreement between Geisinger and Evangelical threatens to harm patients in central Pennsylvania by reducing competition that has improved the price, quality, and availability of healthcare in the region."

"We are disappointed in the Department of Justice decision to challenge our collaboration with Evangelical Community Hospital, especially given the overwhelming community support and the importance of Evangelical remaining a vibrant, independent community hospital," Geisinger said in a statement on Wednesday. "We continue to believe that this collaboration is the best way to make healthcare easier, more affordable and more accessible to Central Pennsylvanians."

The partnership between Geisinger Health and Evangelical Community Hospital was first announced in October 2018.

An agreement was finalized in February 2019, in which Evangelical Community Hospital was to maintain its independence while the two organizations partnered to invest $265 million in their shared communities and IT innovations, and appoint members to the other's boards.

According to the agreement, the partnership enabled Geisinger and Evangelical to "begin exploring joint ventures designed to address the emerging healthcare needs of the region."

Melanie Blackman is the strategy editor at HealthLeaders, a Simplify Compliance brand.


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