HARRISBURG — Pennsylvania Attorney General Kathleen G. Kane’s office has announced it will join a legal action brought by the Federal Trade Commission to block the proposed merger of the Penn State Hershey Medical Center and Pinnacle Health System.
The Office of Attorney General will join a complaint for a temporary restraining order and preliminary injunction the FTC will file in federal court in Harrisburg to prevent the parties from consummating the merger, and to maintain the status quo pending an administrative proceeding. The two health systems are the largest health care providers in the greater Harrisburg area.
“We have learned the hard way in Pittsburgh what happens when a health system has a large market share,” Kane said. “The continued competition between Pinnacle and Hershey will ensure that the greater Harrisburg area will continue to have a vibrant and competitive health care market.”
The FTC issued an administrative complaint alleging the combination of the two largest health systems in the greater Harrisburg area would create a dominant provider of general acute care inpatient hospital services sold to commercial health plans in the area of southcentral Pennsylvania. The area consists of Dauphin, Cumberland, Perry and Lebanon counties.
According to the complaint, the merged entity would control approximately 64 percent of this market, likely leading to increased healthcare costs and reduced quality of care for more than 500,000 local residents and patients.
The complaint alleges that Penn State Hershey and Pinnacle compete vigorously on price, quality of care, and services provided, both for inclusion in commercial health plan networks and to attract patients from one another. Competition is particularly intense in Dauphin County, where Penn State Hershey and Pinnacle operate the only three hospitals.
The complaint notes that Pinnacle and Hershey view each other as close competitors. Health plans have been able to use the threat of dropping one of the hospitals from their networks to extract price concessions.
The complaint will be filed in the U.S. District Court for the Middle District of Pennsylvania. The case was jointly investigated with the Northeast Regional Office of the Federal Trade Commission.
The Office of Attorney General’s Antitrust Section handled the office’s investigation of this transaction. The effort was led by Tracy Wertz, chief deputy attorney general, Jennifer Thomson, senior deputy attorney general and Aaron Schwartz, deputy attorney general.
The Antitrust Section is tasked with protecting the free enterprise system by detecting anti-competitive practices and taking legal action to stop them.