As released by the Office of the Attorney General.

HARRISBURG — Pennsylvania Attorney General Kathleen G. Kane's office today announced it will join a legal action brought by the Federal Trade Commission to block the proposed merger of the Penn State Hershey Medical Center and PinnacleHealth System.

The Office of Attorney General will join a complaint for a temporary restraining order and preliminary injunction the FTC will file tomorrow in federal court in Harrisburg to prevent the parties from consummating the merger, and to maintain the status quo pending an administrative proceeding. The two health systems are the largest health care providers in the greater Harrisburg area.

“We have learned the hard way in Pittsburgh what happens when a health system has a large market share," Attorney General Kane said. "The continued competition between Pinnacle and Hershey will ensure that the greater Harrisburg area will continue to have a vibrant and competitive health care market."

The FTC issued an administrative complaint alleging the combination of the two largest health systems in the greater Harrisburg area would create a dominant provider of general acute care inpatient hospital services sold to commercial health plans in the area of southcentral Pennsylvania. The area consists of Dauphin, Cumberland, Perry and Lebanon counties.

According to the complaint, the merged entity would control approximately 64 percent of this market, likely leading to increased healthcare costs and reduced quality of care for more than 500,000 local residents and patients.

The complaint alleges that Penn State Hershey and Pinnacle compete vigorously on price, quality of care, and services provided, both for inclusion in commercial health plan networks and to attract patients from one another. Competition is particularly intense in Dauphin County, where Penn State Hershey and Pinnacle operate the only three hospitals.

The complaint notes that Pinnacle and Hershey view each other as close competitors. Health plans have been able to use the threat of dropping one of the hospitals from their networks to extract price concessions.

The complaint will be filed in the U.S. District Court for the Middle District of Pennsylvania. The case was jointly investigated with the Northeast Regional Office of the Federal Trade Commission.

The Office of Attorney General's Antitrust Section handled the office's investigation of this transaction. The effort was led by Tracy Wertz, chief deputy attorney general, Jennifer Thomson, senior deputy attorney general and Aaron Schwartz, deputy attorney general.

The Antitrust Section is tasked with protecting the free enterprise system by detecting anti-competitive practices and taking legal action to stop them.

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From our archives.

Video of the Trustee meeting March 20, 2015.

Penn State Health. Part 1.

Part 2.

The vote to approve. The merger.

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From the agenda Item 10.

Proposed Approval of Penn State Health / Pinnacle Merger

Final approval is requested for a proposed transaction with Pinnacle Health System (”Pinnacle”) of Harrisburg, Pennsylvania, through which Pinnacle would become a part of Penn State Health and thereby become a component of a health enterprise including Saint Joseph’s Regional Health Network and Penn State Milton S. Hershey Medical Center. The Board of Trustees authorized the incorporation of Penn State Health for this purpose in September 2014. Terms and conditions of the Pinnacle transaction will be presented in detail to the Board of Trustees at an executive session of the Board. The Committee on Finance, Business and Capital Planning considered the proposed transaction at its meeting in January 2015 and recommended final approval by the Board of Trustees.

Will the Board of Trustees adopt the following resolutions:

RESOLVED, That the Board of Trustees approves the proposed transaction with Pinnacle Health System (“Pinnacle”) of Harrisburg, Pennsylvania, which will integrate Pinnacle as an affiliate of Penn State Health, upon the terms and conditions presented to the Board of Trustees and subject to all requisite regulatory approvals.

FURTHER BE IT RESOLVED, That the officers of the University and Penn State Health are authorized and directed to take such steps as are necessary to make effective this resolution.

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Photo PSU Trustee meeting March 2015