Hershey-Pinnacle merger: What next?

Antitrust lawyer lays out options

After yesterday’s court ruling halting their merger, Penn State Health Milton S. Hershey Medical Center and PinnacleHealth System have several options for what to do next, an antitrust lawyer said.

But none of the options are likely to land them as one combined health system in Dauphin County any time soon, the lawyer said.

The most obvious option for Hershey Medical Center and PinnacleHealth is to abandon the fight and explore ways to partner without merging.

“The next step in the fight is so long and so costly,” said Michael Greer, a health care lawyer in the Indianapolis office of law firm Hall Render Killian Heath & Lyman.

The U.S. Third Circuit Court of Appeals in Philadelphia ruled yesterday to allow a preliminary injunction to stand. The injunction prevents Hershey Medical Center and PinnacleHealth from merging until a Federal Trade Commission administrative law judge rules.

The FTC and the Pennsylvania Attorney General’s Office originally sought an injunction against the merger in December 2015, because they believe it would reduce health care competition in the capital region and increase medical costs.

Hershey Medical Center and PinnacleHealth could appeal the injunction, or they could leave the injunction in place and wait for the FTC’s administrative court to decide.

If the health systems appeal the injunction, they would be asking the Third Circuit court to hear the case again in front of a full panel of judges instead of the three-judge panel that heard the case the first time.

After the Third Circuit, the next step is the Supreme Court. It is unlikely the Supreme Court would hear an appeal for an injunction, Greer said.

If the health systems choose to let the FTC administrative court proceed, an administrative law judge would hear the case based solely on antitrust merits, Greer said.

“Here’s why a lot of times hospitals will abandon a transaction – if you get in front of an FTC judge, it’s very unlikely that you’re going to win,” Greer said.

Although FTC administrative law judges have at times disagreed with FTC staff, such cases are very rare, Greer said.

Lenay Ruhl

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