Courtroom battle over Penn State Health - PinnacleHealth merger starts

Written by Ben Allen, General Assignment Reporter | Apr 11, 2016 8:13 PM

FILE PHOTO: Courtesy Penn State Hershey Medical Center

(Harrisburg) -- Two midstate health systems want to merge, but the Federal Trade Commission is trying to stop the deal.

During the first day of a court hearing, the government laid out its case against the merger between Penn State Health and PinnacleHealth.

In opening statements Monday, lawyers for the Federal Trade Commission and state Attorney General's office say if a federal judge doesn't stop the merger, people would pay higher prices for health care.

In fact, they point to one health insurer who testified that prices could jump 25 percent once a deal with the health systems expires in 5 years.

They say both health systems aggressively compete with each other, showing emails where leaders talk about stealing market share.

The first day of proceedings also featured testimony from a former CEO at Carlisle Regional Medical Center and a researcher from Harvard Medical School.

Both highlighted significant questions about the merger.

When asked if Carlisle Regional could compete with Pinnacle's three hospitals or Penn State Health's extensive medical campus, the former CEO at Carlisle Regional, Richard Newell Jr., said it would be "like a high school team compared to professional teams".

Penn State Health and Pinnacle Health counter that they compete with other, larger health systems, like Lancaster General Health, Geisinger in Danville, and even Johns Hopkins in Baltimore.

Penn State Health says if it doesn't merge with Pinnacle, it'll have to build a new $277 million tower for patient beds, costs that it says will be passed on to consumers.

The government is asking a federal judge for a temporary halt to the merger.

But this decision is expected to determine the fate of the proposal.

The federal court hearing could last all week.

Inside the Chambers:

By my count, 12 lawyers are a part of proceedings.
And that doesn't include what looked like a number of lawyers watching from the public benches in the courtroom.

Speaking of the audience, Dr. Craig Hillemeier and Michael Young, the leaders of Penn State Health and PinnacleHealth, respectively, both watched opening statements.

Some slides showed to the courtroom audience were blacked out to preserve confidentiality. However, on two slides used during the government's opening statements, the unredacted titles contained the names Highmark and Capital Blue Cross (the rest of the information on the two slides were blacked out). Though that it may be no surprise to follow the industry that those are the two largest insurers in the region, I spotted some whispering in the audience once people realized that the information was likely meant to be private.

At times, there were two children in the courtroom. Those are either the smartest kids in the Harrisburg area, or Mom or Dad wanted them to see the federal court system in action.

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