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Bates White authors examine hospital mergers

Healthcare Mergers: A Post-Mortem

Cory Capps, David Dranove, and Zenon Zabinski; Martin Gaynor and Kevin Pflum
Competition Policy International
July 2017

The July issue of CPI Antitrust Chronicle explores recent developments in hospital mergers as well as the tools used to analyze those mergers. Bates White staff authored two articles in this issue that delve into the challenge of market definition in hospital merger analysis in the context of the recent Advocate-NorthShore and Hershey-Pinnacle hospital merger cases, in which the FTC initially failed to secure preliminary injunction in district court before prevailing in the Courts of Appeals.

In “Getting market definition right: Hospital merger cases and beyond,” Carnegie Mellon University Professor and Bates White Academic Affiliate Martin Gaynor and Senior Economist Kevin Pflum discuss how, in denying the injunctions, the lower courts erred by overlooking the unique institutional features of the market for hospital services, causing them to draw incorrect conclusions about the relevant market. They review the procedure used by the FTC and DOJ's Antitrust Division to define markets, and discuss how this procedure applies to the markets for hospital services specifically.

In “The long, slow decline of Elzinga-Hogarty and what comes after,” Bates White Partner Cory Capps and Senior Economist Zenon Zabinski, along with Northwestern University’s Kellogg School of Management Professor David Dranove, explain that the two appellate court rulings are likely to end the use of an alternative methodology for defining relevant geographic markets in hospital merger cases, known as the Elzinga-Hogarty test. They discuss the implications of this development on future enforcement of hospital mergers by federal agencies.