On  November 16, 2012, the Federal Trade Commission (FTC) announced that the FTC and Pennsylvania Attorney General (AG) will jointly file a complaint in U.S. District Court for the Eastern District of Pennsylvania next week to obtain a preliminary injunction to block Reading Health System’s proposed acquisition of the Surgical Institute of Reading (SIR), pending an FTC administrative trial and any appeals. The FTC also issued an administrative complaint, which initiates the FTC proceedings before an FTC Administrative Law Judge regarding whether the transaction would violate the antitrust laws.

According to the FTC’s administrative complaint, the proposed acquisition would reduce competition in four markets where Reading Health System and SIR compete: (1) inpatient orthopedic/spine surgical services; (2) outpatient orthopedic/spine services; (3) outpatient ENT surgical services; and (4) outpatient general surgical services.  In each market, the FTC alleges, the proposed acquisition would lead to combined Reading Health System/SIR market shares ranging from 49 to 71 percent.  The transaction would also increase Reading Health System’s negotiating leverage, enabling it to raise the reimbursement rates it negotiates with commercial health plans.

This action is yet another reminder that the FTC has been aggressively investigating, and challenging, hospital mergers and acquisitions in what the FTC considers to be concentrated markets.

The FTC’s press release is available by clicking here.

Reporters, Jeffrey Spigel, Washington, D.C., +1 202 626 2626, jspigel@kslaw.com and John Carroll, Washington, D.C., +1 202 626 2993, jcarroll@kslaw.com.