Taken from The Philadelphia Inquirer
March 1, 2021
The Federal Trade Commission said Monday that it has dropped its opposition to Thomas Jefferson University’s acquisition of Einstein Healthcare Network, a deal that would dramatically expand Jefferson’s footprint in the Philadelphia market but also add to its already significant debt load.
Since 2015, Jefferson has expanded from three hospitals to 14; with the Einstein acquisition, that tally would increase to 18.
The FTC had no comment beyond noting that commissioners had voted 4-0 to dismiss the case, which had been pending in the Third Circuit Court of Appeals since December, a spokesperson said.
“Two nonprofit, anchor institutions coming together to preserve access to care and do the right thing by the residents of Philadelphia is a creative solution to ensure Einstein doesn’t face the same fate as Hahnemann University Hospital,” Jefferson president Stephen K. Klasko said in a news release.
In a 2018 interview, Klasko described Einstein as the missing piece to a network of hospitals that would make Jefferson indispensable to any health insurer that wanted to do business in the region. “Nobody can enter Philadelphia without going through us,” he said.
The FTC and the Pennsylvania Attorney General challenged the acquisition, alleging that it would give Jefferson the power to unfairly raise prices.
A federal judge rejected those arguments in December. During an October hearing, he said that he found it hard to grasp why the regulators failed to mention the University of Pennsylvania Health System in their arguments and were asking him to believe that Penn would not be “a competitive constraint on prices that a merged Jefferson-Einstein can get from insurers.”
The FTC’s loss illustrated the difficulty the agency has in mounting successful antitrust challenges in large urban areas when the merger partners are willing to endure long delays, antitrust experts have said.
If the deal were completed as expected within six months, it would cap a long run of consolidation by Jefferson under Klasko, who arrived as CEO in 2013. Since 2015, Jefferson has acquired Abington, Kennedy, and Aria health systems, and added Philadelphia University. The Einstein acquisition would tack on three general hospitals in Philadelphia and Montgomery Counties, plus Moss Rehab.
In all, Jefferson would operate 18 hospitals in the region with 3,600 beds. The University of Pennsylvania Health System has 3,000 licensed beds spread across six hospitals from Princeton to Lancaster.
Klasko has been focused for years on building a large system, and he’s done a remarkable job of it, said Joshua Nemzoff, a veteran nonprofit health-care investment banker based in New Hope.