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Board Of Trustees To Hold Special Meeting On Hershey-Pinnacle Merger

by Geoff Rushton

Penn State’s Board of Trustees will hold a special meeting Friday afternoon about the proposed merger of Penn State Hershey Medical Center and Pinnacle Health System.

The agenda for the meeting lists the only item as “Consideration of Pinnacle transaction.” The meeting, which is being held by conference call, will begin with an executive session at 3 p.m. with the public meeting at 3:30 p.m. Audio broadcast will be available at wpsu.org/trustees.

Penn State spokesperson Lisa Powers said she couldn’t speculate on what will be discussed or actions that could be taken.

“The meeting is set to look at the recent decision of the FTC and how it may impact Penn State Health,” Powers said.

On Sept. 27, the U.S. Third Circuit Court of Appeals overturned a federal district court’s decision and granted a request by the Federal Trade Commission and state Attorney General’s Office to issue a preliminary injunction on the merger. The decision halts the merger until an FTC administrative law judge issues a ruling.

Penn State and Pinnacle signed in 2014 a letter of intent to form a single health enterprise under the banner of a new organization called Penn State Health, and the boards for both entities approved the proposal in March 2015.

But the FTC filed a complaint in December 2015 in federal district court saying that the integration of the two health systems would “substantially reduce competition in the area surrounding Harrisburg, Pennsylvania, and lead to reduced quality and higher health care costs for the area’s employers and residents.”

Both Penn State Hershey and Pinnacle are based in Dauphin County, with Pinnacle’s headquarters in nearby Harrisburg.

Penn State and Pinnacle vowed to fight the complaint and said the merger would benefit patients in terms of both quality. A U.S. Middle District Court ruled in their favor earlier this year.

With the appeals court decision, Penn State and Pinnacle could appeal the injunction or let it stand and wait for the administrative law judge’s decision. Or they could abandon the merger altogether — a distinct possibility according to legal observers.

“The next step in the fight is so long and so costly,” Indianapolis-based health care lawyer Michael Greer told Central Penn Business Journal.

“Here’s why a lot of times hospitals will abandon a transaction – if you get in front of an FTC judge, it’s very unlikely that you’re going to win,” Greer added.

Stephen Calkins, a Wayne State University law professor and former general counsel of the FTC, told The Pennsylvania Record, a news source focused on civil law in the state, that it was unlikely Penn State and Pinnacle would appeal the injunction.

“The defendants said earlier that they would call off the merger if they lost,” Calkins told the Record.

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