Dive Brief:
- UnityPoint Health and Presbyterian Healthcare Services signed a letter of intent seeking to consolidate and create a new healthcare organization, the two systems announced Thursday.
- Combined, the two systems operate more than 40 hospitals and hundreds of clinics throughout Illinois, Iowa, New Mexico and Wisconsin. The two also operate health insurance plans.
- They are seeking to operate under a parent organization to generate “administrative efficiencies,” the Iowa- and New Mexico-based systems said.
Dive Insight:
The move marks another push for a cross-market merger, a type of tie-up that has largely evaded antitrust enforcement.
Most recently, Advocate Aurora Health in the Midwest and Atrium Health in the South closed their merger, creating the nation’s fifth-largest nonprofit health system by revenue.
The deal closed without a challenge from the Federal Trade Commission. The two did not have any geographic overlap, an aspect that has tripped up prior hospital mergers.
“Given the intense antitrust enforcement against local partnerships, systems are finding new ways to grow by joining with leading systems in other states,” said Ken Field, an attorney and co-chair of law firm Jones Day’s global healthcare practice. Field previously worked for the FTC in the Bureau of Competition.
“Like Advocate/Atrium, this deal should not trigger traditional antitrust enforcement thresholds, but may none the less face a protracted investigation by the FTC simply because it involves two large systems,” Field said.
The two claim the deal will help lower administrative costs and increase investments in innovation and “clinical excellence.”
But researchers have raised concerns about the effects that cross-market deals can have on healthcare prices.
A 2019 study found that prices can increase by as much as 10% after systems acquire hospitals in separate markets within the same state. Researchers found these providers have more leverage over insurers after combining.
Unity and Presbyterian said they will now “pursue a period of greater evaluation and exploration of next steps towards a definitive agreement and regulatory approvals.”