Attorneys spar over Hershey-Pinnacle merger

Hearing held today in federal court

A federal court in Philadelphia today heard arguments about a merger between two of Central Pennsylvania’s largest health systems, with a decision expected later this summer.

The hearing in the U.S. Third Circuit Court of Appeals in Philadelphia brought together lawyers representing the government and the two systems, Penn State Health Milton S. Hershey Medical Center and Pinnacle Health System.

The merger had been approved by lower courts, but the Federal Trade Commission and Pennsylvania Attorney General continue to oppose it.

The latest round of arguments was heard by a three-judge panel led by former Pennsylvania Attorney General Michael Fisher.

The government is appealing a May decision by U.S. District Court in Harrisburg that allowed the merger to proceed. That case was decided by Judge John E. Jones III.

Pressing the government’s case was attorney William H. Efron. He argued that Jones III failed to take into account whether the combined entity would raise prices for health care in the Harrisburg region.

Louis K. Fisher, an attorney for the Hershey-Pinnacle side, focused on geographic issues. He said Hershey draws 46 percent of its patients from outside the Cumberland-Dauphin-Lebanon-Perry County region and that a wide swath of patients could easily choose a hospital closer to their home.

The decision is expected to come down later this summer.

Efron also cited testimony from insurance providers in the Harrisburg region who have been worried about the potential lack of competition following a merger.

Fisher argued that other providers are coming into the market. He specifically cited  Lancaster General Health. Following its recent merger with University of Pennsylvania Health System, LG Health has expanded into the Harrisburg area by opening an outpatient center in Lebanon County in October.

Both sides were scheduled to have 30 minutes each to present their arguments, but neither got more than a few minutes before being peppered with questions from Fisher, Judge Joseph A. Greenaway Jr. and Judge Cheryl Ann Krause in a courtroom even Fisher joked he was surprised to see so crowded with only one case on the docket.

The judges asked Efron if he believed he had met his burden of proof against the district court’s decision. He said he believed the government has. 

They asked Louis Fisher how the combination of the health systems wouldn’t be a monopoly. Patients that come from farther away can easily find a new hospital, he said.

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