Part III Administrative Complaint
(August 2007), the Commission ruled that Evanston Northwestern Healthcare Corp.’s 2000 acquisition of Highland Park Hospital was anticompetitive and resulted in higher prices for acute care inpatient hospital services in parts of Chicago’s northern suburbs. The Commission concluded that in this “highly unusual case,” divestiture, the remedy imposed by the administrative law judge, would be too costly and potentially risky and instead imposed a conduct remedy. The Commission’s order requires Evanston to set up two separate and independent contract negotiation teams to bargain with managed care organizations to revive competition between Evanston’s two hospitals and the Highland Park hospital. In an initial Decision dated October 17, 2005 the Administrative law judge found that Evanston Northwest Healthcare Corporation’s acquisition of an important competitor, Highland Park Hospital, resulted in higher prices and substantially lessened competition for acute care inpatient services in parts of Chicago’s northwestern suburbs. The Administrative law judge found that the evidence established that the merged hospital exercised its enhanced post-merger market power to obtain price increases significantly above its premerger prices and substantially larger than price increases obtained by comparable hospitals. The ALJ also found that the evidence ruled out explanations for the price increase, other that the exercise of market power. The ALJ entered an order that would require the divestiture of the acquired hospital. The hospital’s appeal of the ALJ’s decision and order requiring divestiture of Highland Park Hospital is now pending before the Commission. On February 10, 2004 the Commission issued an administrative complaint alleging that following Evanston Northwestern Healthcare Corporation's acquisition of Highland Park Hospital prices charged to health insurers for medical services increased and, therefore, higher costs for health insurance were passed on to consumers of hospital services in the Cook and Lake counties of Illinois. The complaint also alleges that a physicians group affiliated with both hospitals, Highland Park Independent Physician Group, negotiated prices for physicians on staff at Evanston as well as for several hundred independent physicians not affiliated with either hospital. According to the complaint, these actions constitute illegal price fixing among competing physicians or physician groups and deny consumers the benefits of competition in physician services. In May, 2005, the Commission approved a final consent order to resolve a separate count in the complaint involving alleged price fixing by doctors associated with the two hospitals.