Referring to concerns about the hospital’s competitiveness, the US Department of Justice on Wednesday sued to block Geisinger Health’s partial acquisition of Evangelical Community Hospital.
In the application, the department said that the agreement changes the relationship between the close competitors, which reduces the incentive to compete aggressively, which is likely to lead to “higher prices, lower quality and reduced access to high-quality hospital services for patients in Central Pennsylvania. “
The lawsuit was appealed to the U.S. District Court of the Middle District of Pennsylvania.
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The hospitals announced final negotiations on the terms on February 4, 2019, which included strengthening Evangelical’s relationship with Geisinger and the Geisinger Health Plan while allowing the Lewisburg-based hospital to remain independent.
In a statement from Media Relations specialist Joseph Stender, Geisinger expressed his disappointment at the attempt to block the deal.
“We are disappointed with the Justice Department’s decision to challenge our collaboration with Evangelical Community Hospital, especially given the overwhelming community support and the importance of Evangelical remaining a vibrant, independent community hospital,” the statement said. “We continue to believe that this collaboration is the best way to make health care easier, cheaper and more accessible to Central Pennsylvania.”
Evangelical President and CEO Kendra Auker had a similar reaction.
“We are disappointed with the decision and continue to believe that improving our relationship with Geisinger is in the region’s best interest and will provide effective and cost – effective health care to the communities we serve,” Auker said. “It is important, now more than ever, that patients have accessible and affordable healthcare and this collaboration is the best way to provide these benefits.
“We will continue to work with our legal counsel in an effort to address the issues raised in the complaint.”
The Department of Justice (DOJ) claims that Geisinger originally sought to acquire Evangelical in its entirety, but that hospital officials acknowledged the agreement “would likely violate antitrust laws” and decided on a partial acquisition agreement.
“Maintaining competition in the health care markets is a priority for the Department of Justice because of its important impact on Americans’ health and well-being,” said Attorney General Makan Delrahim of the Department of Justice’s antitrust department. “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 health care in the region.”
In the application, the DOJ said that the agreement gives Geisinger a 30 percent ownership interest in Evangelical and demands that it invest $ 100 million in Evangelical.
“These terms link the two organizations financially and set Geisinger up as a critical source of funding for the Evangelical for the foreseeable future,” the DOJ said in a news release.
Geisinger documents stressed the new link between the companies and say that Evangelical is “tied to us” so “they do not go to a competitor”, according to the publication.
The agreement also gives Geisinger the rights to the first offer and the first refusal for certain transactions and joint ventures, which makes it difficult for Evangelical to cooperate with other companies, the publication says.
In February 2019, Geisinger said that the five-year collaboration would enable Evangelical to share Geisinger’s innovations in information technology (IT), that Geisinger would appoint 30 percent of the community members who serve on the Evangelical board, and that Evangelical would appoint a member of the community. to the Geisinger Health Plan board.
“Evangelical and Geisinger can also now begin exploring joint ventures designed to meet the region’s new health care needs,” Geisinger said in a news release following the announcement.