Jerome W Hoffman is a Partner in our Jacksonville office.
In Federal Trade Comm'n v. Sanford Health, No. 1:17-133, 2017 WL 7369054 (D. N.D. Dec. 13, 2017), the court preliminary enjoined the merger of two large physician practices in North Dakota's Bismarck/Mandan market on the grounds that the proposed merger would substantially lessen competition in four physician service lines that it deemed separate product markets without close substitutes: general surgery, OB/GYN, adult primary care and pediatric services. As a result of the merger, the combined entity would have had between 80 percent and 100 percent of the market share of the four service lines in question. The court concluded that the evidence did not demonstrate that Sanford's chief competitor, CHI, would be able to recruit enough physicians timely to replace the lost patient referrals. Recruitment of physicians to North Dakota is difficult historically due to the weather and other market conditions. Furthermore, Sanford is an integrated network, including a hospital and insurance plan, meaning the merger would affect more than just the physician services market. In granting the preliminary injunction, the court rejected Sanford's defenses based on enhanced efficiencies and the need to maintain its negotiating power with Blue Cross/Blue Shield of North Dakota, which is the largest commercial insurer in North Dakota. The court also discounted Sanford's promise to not raise reimbursement rates. The court found instead that the creation of a near-monopoly provider of physician services in the Bismarck-Mandan area would likely lead to higher reimbursement rates and higher premiums for consumers.
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