Firm News
FTC Ends Investigation Into Vista Health Merger
July 1, 2004
CHICAGO – The Federal Trade Commission announced today that it has formally voted to terminate its intensive two and a half-year investigation into the Vista Health hospital combination. The Waukegan, Illinois-based Vista Health came under scrutiny as part of the FTC’s national hospital merger retrospective. This same retrospective resulted in the FTC’s challenge earlier this year of another Chicago area hospital merger: the 1999 combination of Evanston Northwestern Healthcare and Highland Park Hospital.
"The retrospective was launched after the government lost a string of cases aimed at blocking hospital mergers before they happened," said Laura Martin, healthcare antitrust attorney at Katten Muchin Zavis Rosenman in Chicago and counsel for Vista Health. "The courts were reticent to believe that local hospitals would raise post-merger prices and applied tests that often resulted in overly-broad market definitions that made it nearly impossible for the government to win a case. The goal of the retrospective was to find a case where the FTC could demonstrate actual anticompetitive effects sufficient to justify an ‘unwind’ of a consummated merger, thus sending a clear message that the hospital industry was not immune from antitrust scrutiny."
Vista Health was created in 2000 when the Frankfort, Illinois-based Provena Health, a seven-hospital Catholic system, formed a joint venture to operate its 254-bed Provena St. Therese Medical Center (STMC) with Waukegan-based Victory Health Services, parent of 120-bed Victory Memorial Hospital (VMH).
"On its face, the Vista transaction appeared the perfect target for FTC prosecution because it involved the only two hospitals in a two-hospital town," said Martin. "Convincing the Commission that Vista competed in a broader market at first seemed an uphill battle. Ultimately, evidence of competition from rival hospitals, that STMC would have increased its rates with or without the merger and, most importantly, that Vista’s post-merger price increases were no greater than those found at similar area hospitals carried the day."
The FTC decision allows Vista Health to move forward with its plan to consolidate the two hospitals, a plan that promises significant cost savings and efficiencies. Martin concluded, "An FTC challenge might have pushed the Vista system into a downward financial spiral from which it could not escape. Had that happened, patients ultimately would have been the ones to suffer."
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