DOJ Sues to Block Geisinger Health’s Partial Acquisition of Evangelical Community Hospital

On August 5, the Department of Justice filed an antitrust lawsuit against Geisinger Health in an attempt to block its partial acquisition of Evangelical Community Hospital. The two healthcare providers are “the largest health system and largest independent community hospital in a six-county region in central Pennsylvania.” Their planned partial merger sparked concerns with the Department of Justice which claimed that it would reduce competition and create problems for healthcare purchasers and patients in the area.

According to the Department of Justice, the complaint against Geisinger Health alleges that the acquisition agreement “fundamentally alters the relationship between the [healthcare providers], raising the likelihood of coordination and reducing Defendants’ incentives to compete aggressively against each other.” The Department claimed that the transaction would “lead to higher prices, lower quality, and reduced access to high-quality inpatient hospital services for patients in central Pennsylvania.”

Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division believed that the transaction threatened to reduce competition, which is vital to producing quality healthcare. “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,” he said. “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.”

The agreement allegedly “increased the likelihood of coordination” through a financial bond between the two healthcare providers. Geisinger would have a “30 percent ownership interest in Evangelical” and be required to invest $100 million in the company. As the Department of Justice explained, “These terms link the two organizations financially and set Geisinger up as a critical source of funding to Evangelical for the foreseeable future.