Administrative Law Judge Upholds FTC Complaint Ordering Evanston Northwestern Healthcare Corporation to Unwind Five-Year-Old Acquisition

Amanda Nastari


On October 21, 2005, the Federal Trade Commission (FTC) announced that Administrative Law Judge Stephen J. McGuire had ordered Evanston Northwestern Healthcare Corporation (ENH) to divest Highland Park Hospital, located in a Chicago suburb.1 (The decision can be found at http://www.ftc. gov/os/adjpro/d9315/051021idtextversion. pdf.) ENH had acquired Highland Park five years ago for $200 million. In an administrative complaint issued in February 2004, the FTC alleged that the acquisition had resulted in “substantially lessened competition” and higher prices for insurers and healthcare consumers for general acute care inpatient services sold to managed care organizations.2 In upholding part of the complaint, Judge McGuire evaluated post-acquisition evidence that “ENH exercised its enhanced post-merger market power to obtain price increases significantly above its premerger prices and substantially larger than price increases obtained by other comparison hospitals.”3 (ENH has filed notice that it will appeal the judge’s initial decision to the full Commission.)