DOJ Settles with Pennsylvania Health Centers After Proposed Acquisition Prompted Antitrust Suit

Geisinger Health and Evangelical Community Hospital will settle with the Department of Justice (DOJ) to resolve the DOJ’s antitrust suit against the entities challenging Geisinder’s partial acquisition of Evangelical, the DOJ announced Wednesday.

The settlement comes after an Aug. 5, 2020, complaint by the DOJ alleging antitrust violations and questioning the competitors’ partial merger, noting that Geisinger, which operates various urgent-care and outpatient facilities and 12 hospitals, and Evangelical, an independent community hospital also operating other area health care facilities, serve patients in a six-county region in Pennsylvania and occupy about 70% of the market. The complaint argued that the proposed “entanglements” between the hospitals would reduce their incentives to compete against one another, “increasing the likelihood of harmful coordination,” the DOJ said. 

Among the provisions of the slated agreement were a 30% ownership interest for Geisinger, a $100 million payment to Evangelical to fund Geisinger-approved projects, and Geisinger obtaining certain rights for transactions and joint ventures, which “would have made it difficult for Evangelical to partner with other healthcare entities,” according to the DOJ.

“The anticompetitive agreement between Geisinger and Evangelical reduced their incentives to compete on the price, quality, and availability of high-quality healthcare services, which would have harmed patients in central Pennsylvania,” Acting Assistant Attorney General of the DOJ Antitrust Division Richard A. Powers said. “Today’s settlement ensures that those patients will continue to benefit from robust competition between Geisinger and Evangelical.”

The settlement agreement effectively voided the original acquisition terms between Geisinger and Evangelical and set forth new ones aimed at encouraging procompetitive conduct. Accordingly, Geisinger will be able to support upgrading Evangelical’s information technology systems in order to improve patient care, and the payment to Evangelical from Geisinger will be required to be put toward projects benefiting patients and the community, the DOJ said.