DOJ Reaches Deal With Geisinger Health, Evangelical In Antitrust Case
Geisinger Health and Evangelical Community Hospital have reached a settlement with the Department of Justice (DOJ) in an antitrust case filed last year by federal officials over a “partial acquisition” agreement between the two service providers. health care.
Geisinger is an integrated healthcare provider with 12 hospitals as well as emergency care centers, ambulatory care facilities, and physician offices across Pennsylvania. Its annual revenue was $ 7.1 billion in 2019. Evangelical is a 132-bed independent community hospital in Lewisburg with an emergency care center, several outpatient facilities and doctor’s offices in the region. central Pennsylvania. Its annual revenue was $ 259 million in 2019.
They finalized a partnership agreement in 2019.
But officials have alleged that Geisinger and Evangelical are close competitors for general hospital acute inpatient care services in a six-county region of central Pennsylvania, accounting for about 70% of the market. According to the DOJ complaint, the agreement between the hospitals “reduced their incentives to compete”.
“For example, Geisinger was to obtain a 30% stake in Evangelical in exchange for providing $ 100 million to Evangelical for use on projects approved by Geisinger,” officials said in a statement. “These conditions would have made Geisinger an essential source of funding for Evangelical for the foreseeable future and would have enabled Geisinger to influence the strategic decisions of its competitor. The agreement also gave Geisinger rights of first offer and first refusal for certain transactions and businesses, which, along with other provisions of the agreement, would have made it difficult for Evangelical to partner with others. health care entities. “
The proposed settlement filed with the United States District Court for the Central District of Pennsylvania has yet to be approved by the court.
Pursuant to the proposed arrangement, Geisinger will cap its ownership interest in Evangelical at a passive interest of 7.5%. The proposed settlement also prevents Geisinger from increasing its stake in Evangelical, granting a loan or providing a line of credit to Evangelical, or exercising control over Evangelical spending, DOJ officials said in a statement. communicated.
The proposed settlement allows some arrangements to go ahead, Justice Department officials said in a statement. For example, this will enable Evangelical to secure new electronic health record information technology systems and related IT support from Geisinger. It also forces Evangelical to use funds associated with Geisinger’s passive investment for specific projects that will benefit patients and the community.
“We are delighted to have worked with the Department of Justice to develop a resolution that allows us to maintain our investment in the health of this community,” said Matthew Walsh, executive vice president and chief operating officer at Geisinger , in a press release. “We are grateful that the Department of Justice recognizes the investments Geisinger has made in Evangelical to date and we look forward to continuing our work on projects that will benefit patients and the community at large.”
Evangelical CEO Kendra Aucker also praised the proposed settlement deal.
“Evangelical can better continue to meet the needs of our community by remaining an independent community hospital and using Geisinger’s financial support to strengthen our facilities, technology and services,” she said in a statement.