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Our Take: FTC, Pennsylvania challenge proposed merger of Jefferson Health, Albert Einstein Healthcare

Mar 02, 2020
Last Thursday the Federal Trade Commission (FTC) issued an administrative complaint seeking to prevent the merger of Jefferson Health and Albert Einstein Healthcare Network. Both of the not-for-profit health systems serve the Greater Philadelphia region.

In a press release, the FTC said the two health systems “have a history of competing against each other to improve quality and service, including by upgrading medical facilities and investing in new technologies.” The merger, according to the regulatory commission, would eliminate competition between the health systems to be included in payer networks, “to the detriment of patients.”

Along with Pennsylvania’s attorney general, the FTC will file a formal complaint in federal district court. Meanwhile, FTC staff members have been authorized to take legal steps to block the health systems from completing the merger ahead of the administrative trial, which is scheduled to begin on Sept. 1. 

Our Take:
Jefferson Health System and Albert Einstein Healthcare Network (AEHN) previously had a 10-year relationship that, by all appearances, ended amicably in early 2008. They’ve also had an ongoing academic affiliation for more than 20 years.

After Dr. Stephen Klasko became Jefferson Health’s CEO in 2013, the health system merged with Abington Health (2015), Aria Health (2016), and Kennedy Health (2018). Those deals were all structured as “mergers of equals,” with the stated goal of bringing advanced health services closer to patients in their communities. Today, the health system has 14 hospitals.

By comparison, AEHN has three medical centers and a rehabilitation hospital. The medical center in Philadelphia is a safety net hospital. 

Given their previous relationships, it wasn’t a big surprise when Jefferson Health and AEHN announced in September 2018 that they had signed a definitive agreement to merge. 

But something else also took place in September 2018: The FTC got a new commissioner, Christine Wilson.

Up until now, the FTC hasn’t challenged a major merger between hospitals since 2016, when it attempted to block Mountain States Health Alliance’s merger with Wellmont Health. The attempt failed, and the 21-hospital system Ballad Health was created.

While speaking at an event in January, Commissioner Wilson said the FTC would be evaluating potential hospital mergers more closely and would be taking another look at past mergers to see if they actually did lower costs, a claim often used to justify proposed deals. 

The FTC’s administrative complaint says that a Jefferson-Einstein merger would result in the combined entity controlling at least 60% of the market for inpatient general acute care services in North Philadelphia and 45% in Montgomery County, as well as 70% or more of the market for inpatient rehab services for patients in the region who are recovering from serious acute conditions. 

We’re all for increased scrutiny of mega mergers that can monopolize markets and drive up the cost of care, but in our opinion this merger isn’t one that should be blocked. Philadelphia has already lost one of its oldest safety net hospitals with the closure of Hahnemann University Hospital last September. 

“At a time when regional and national politicians and leaders are seeking ways to better support essential safety net hospitals, we see this merger as a creative solution to preserve access and enhance services to the residents of North Philadelphia,” the health systems said in a joint statement. 

They said they would determine their next steps after reviewing the FTC’s complaint.

What else you need to know
Minnesota-based Mayo Clinic reported $1.06 billion in net operating income for 2019, up from $617 million the year before. The nonprofit health system’s overall revenue for 2019 was $13.8 billion, up 9.7% from 2018. Mayo Clinic executives attributed the higher operating income to increased patient volume, noting that the health system treated more than 1.2 million patients last year. According to a Star Tribune report, Mayo Clinic had total net income of $2.3 billion in 2019, which factors in investment income. 

In separate news, the Mayo Clinic hospital in Albert Lea, Minn., just opened a new 2,300-square-foot pharmacy that cost nearly $1 million to build. It will focus on chemotherapy and infusion therapy drugs and serve patients in the hospital’s Cancer Center, emergency department, and psychiatric services unit.

I hunted all over the Mayo Clinic website but couldn’t find a press release for either story, so I linked to the local papers’ coverage.

Johnson & Johnson (J&J) is teaming up with Apple on a virtual clinical trial called the Heartline Study, which will assess whether wearable technology can help people detect atrial fibrillation (AF) and potentially prevent adverse outcomes, including stroke. The Apple Watch uses a sensor to detect irregular heart rhythms; it also has an electrocardiogram (ECG) app. Participants in the study must be 65 or older and have original Medicare. Some will wear an Apple Watch and have access to the Heartline Study app on their iPhone, which will provide information and tips for heart health, help users know what to do if their Apple Watch sends them an alert about possible AF, and offer educational content to assist with follow-up, J&J noted. Participants in the control group will use just the Heartline Study app. 

Aetna is partnering with Emory Healthcare and Northside Hospital System to offer the Aetna Whole Health program in Atlanta, starting April 1. The value-based model will offer HMO and EPO coverage, with both fully insured and self-insured network options. The goal of the program is to “lower medical cost growth over time by reducing waste, improving care coordination, and closing care gaps.” Members will have access to approximately 900 primary care physicians, 3,500 specialists, 14 hospitals, and more than 500 outpatient facilities. Atlanta isn’t the first market for Aetna’s Whole Health plans, but it is the first market in which CVS HealthHUB stores will be directly integrated into the model. CVS said it has 16 HealthHUBs in the Atlanta region and plans to open another 15 to 20 there this year.

CMS wants to extend the Comprehensive Care for Joint Replacement Model for three years. The agency issued a proposed rule on Feb. 20 that would extend the bundled-payment program, which is scheduled to end on Dec. 31, and make certain changes to it — such as including outpatient replacements, and basing price targets on the most recent year of claims data instead of three years’ worth. The proposed rule would also alter the way CMS calculates payments in the model, and there would be just one reconciliation period (at six months after the close of each performance year); currently, there are two (at two and 14 months after the close of each performance year).

The FDA has approved a new nonstatin cholesterol drug: Esperion’s Nexletol (bempedoic acid). The once-daily oral drug is the first nonstatin treatment to be approved for lowering LDL cholesterol in nearly two decades, Esperion noted in a press release. A first-in-class ATP citrate lyase inhibitor, Nexletol is indicated as an adjunct to diet and maximally tolerated statin therapy — which can mean no statin at all, Esperion CEO Tim Mayleben pointed out — for adults with heterozygous familial hypercholesterolemia or established atherosclerotic cardiovascular disease who need to further lower their LDL cholesterol. Nexletol was approved on Feb. 21, and Esperion’s Nexlizet, which combines Nexletol with ezetimibe and is similarly indicated, was approved on Feb. 26. Nexletol will be available by the end of March, and Nexlizet will be available in July.

People who get migraines will soon have a new intravenous (IV) preventive option. Lundbeck’s Vyepti (eptinezumab-jjmr) recently became the first IV drug to gain FDA approval for migraine prevention. The drug, a CGRP inhibitor, is dosed every three months and will be available in April, Lundbeck said in a news release.

What we’re reading
How to Better Support Small Physician-led Accountable Care Organizations. Duke Margolis Center for Health Policy, February 2020

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