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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 1 of 34
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`UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
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`
`
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`Plaintiff,
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`UNITED STATES OF AMERICA,
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`
`
`
`v.
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`GEISINGER HEALTH
`
`
`
`
`
`Civil Action No.:
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`
`
`
`and
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`EVANGELICAL COMMUNITY
`HOSPITAL,
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`
`
`
`
`
`
`Defendants.
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`COMPLAINT
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`The United States of America brings this civil antitrust action to enjoin
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`Geisinger Health’s partial acquisition of Evangelical Community Hospital.
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`Defendants’ agreement creates substantial financial entanglements between these
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`close competitors and reduces both hospitals’ incentives to compete aggressively.
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`As a result, this transaction is likely to substantially lessen competition and
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`unreasonably restrain trade, resulting in harm to patients in the form of higher
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`prices, lower quality, and reduced access to high-quality inpatient hospital services
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`in central Pennsylvania.
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 2 of 34
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`I. INTRODUCTION
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`1.
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`Geisinger and Evangelical are, respectively, the largest health system
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`and largest independent community hospital in a six-county region in central
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`Pennsylvania. For many patients in this region, Geisinger and Evangelical are
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`close substitutes for the provision of inpatient general acute-care services. As the
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`CEO of Evangelical explained in an interview describing the transaction with
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`Geisinger, “if you don’t get your care here [at Evangelical], you get it there [at
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`Geisinger].”
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`2.
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`Geisinger competes for virtually all of the services that Evangelical
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`provides, with Geisinger also offering some high-end, specialized services that
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`Evangelical does not offer. This competition between Geisinger and Evangelical
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`has improved the quality, availability, and price of inpatient general acute-care
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`services in the region.
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`3.
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`In late 2017, Evangelical announced to Geisinger and other industry
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`participants that it was considering selling itself or entering into a strategic
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`partnership with another hospital system or healthcare entity. This announcement
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`raised concerns for Geisinger, which had long feared that Evangelical could partner
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`with a hospital system or insurer to compete even more intensely with Geisinger.
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`A more effective competitor could put Geisinger’s revenues at risk.
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 3 of 34
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`4.
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`In an effort to forestall that outcome and eliminate existing
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`competition from Evangelical, Geisinger sought to acquire Evangelical in its
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`entirety, making a bid for its rival that was substantially larger than any comparable
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`offer. During negotiations, however, both Geisinger and Evangelical recognized
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`that a merger between the two hospitals would likely be blocked on antitrust
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`grounds. So instead, Defendants tried a strategy to avoid antitrust scrutiny.
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`5.
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`On February 1, 2019, Defendants agreed to a partial acquisition—
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`self-styled as a “Collaboration Agreement.” As part of this agreement, Geisinger
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`acquired a 30% interest in Evangelical. In exchange, Geisinger pledged to provide
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`$100 million to Evangelical for investment projects and intellectual property
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`licensing.
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`6.
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`The $100 million pledge, however, was not made altruistically and is
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`certainly not without strings. The partial-acquisition agreement ties Geisinger and
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`Evangelical together in a number of ways, fundamentally altering their relationship
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`as competitors and curtailing their incentives to compete independently for
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`patients. Patients and other purchasers of healthcare in central Pennsylvania likely
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`will be harmed as a result of this diminished competition.
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 4 of 34
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`II. JURISDICTION AND VENUE
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`7.
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`This Court has subject-matter jurisdiction under Section 4 of the
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`Sherman Act, 15 U.S.C. § 4, Section 15 of the Clayton Act, 15 U.S.C. § 25, and 28
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`U.S.C. §§ 1331, 1337, and 1345.
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`8.
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`Defendants are engaged in activities that substantially affect interstate
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`commerce. Defendants provide healthcare services for which employers, insurers,
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`and individual patients remit payments across state lines. Defendants also
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`purchase supplies and equipment that are shipped across state lines, and they
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`otherwise participate in interstate commerce.
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`9.
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`Venue is proper under Section 12 of the Clayton Act, 15 U.S.C. § 22,
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`and under 28 U.S.C. §§ 1391(b) and (c).
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`10. This Court has personal jurisdiction over each Defendant. Geisinger
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`and Evangelical are both incorporated in the Commonwealth of Pennsylvania with
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`their principal place of business located in the Middle District of Pennsylvania.
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`III. DEFENDANTS AND THE AGREEMENT
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`11. Geisinger Health is an integrated healthcare provider of hospital and
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`physician services. Geisinger operates 12 hospitals in Pennsylvania and New
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`Jersey and owns physician practices throughout Pennsylvania, with a significant
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`presence in the central and northeastern portions of the state. Geisinger also
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`operates urgent-care centers and other outpatient facilities in Pennsylvania and
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 5 of 34
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`New Jersey. As of April 2020, the Geisinger system employed approximately
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`32,000 employees, including 1,800 physicians.
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`12. Geisinger’s flagship hospital, Geisinger Medical Center, is located in
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`Danville, Pennsylvania, and is licensed to accommodate 574 overnight patients.
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`Geisinger operates three other hospitals in the area: Geisinger Shamokin (70
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`beds), Geisinger Jersey Shore (25 beds), and Geisinger Bloomsburg (76 beds). In
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`addition, Geisinger operates several urgent-care centers and other outpatient
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`facilities within the area.
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`13. Geisinger also operates Geisinger Health Plan, an insurance company
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`that sells commercial health insurance, Medicare, and Medicaid products.
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`Geisinger Health Plan has approximately 600,000 members.
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`14. Geisinger has a history of acquiring community hospitals in
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`Pennsylvania. From 2012 to 2017, Geisinger acquired six hospitals in
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`Pennsylvania. Three of the four hospitals that Geisinger owns in the area,
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`Shamokin, Jersey Shore, and Bloomsburg, were formerly independent hospitals,
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`and two of those hospitals were the subject of previous antitrust challenges.
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`15. Evangelical Community Hospital is an independent community
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`hospital in Lewisburg, Pennsylvania. The hospital is licensed to accommodate 132
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`overnight patients. As of December 2018, Evangelical employed approximately
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`1,800 individuals and had 170 physicians on staff. Evangelical also owns a
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 6 of 34
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`number of physician practices in central Pennsylvania and operates an urgent-care
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`center and several other outpatient facilities.
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`A. Defendants are close competitors in central Pennsylvania
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`16. Geisinger and Evangelical both provide inpatient general acute-care
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`services to patients in central Pennsylvania and together provide care for the vast
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`majority of patients living in Danville and Lewisburg, Pennsylvania, and the
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`surrounding communities.
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`17. Defendants are particularly close competitors in the six-county area in
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`central Pennsylvania comprised of Union, Snyder, Northumberland, Montour,
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`Lycoming, and Columbia counties.
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`18. This six-county area has benefitted from competition between
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`Geisinger and Evangelical. Geisinger and Evangelical are each other’s closest
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`competitor for many services and compete on dimensions that include quality,
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`scope of services, and price. According to a Geisinger Health Plan executive,
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`Geisinger and Evangelical “care for the same people and populations.” Geisinger
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`and Evangelical recognize that they compete closely to provide inpatient general
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`acute-care services, which include orthopedics, women’s health, cardiac, and
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 7 of 34
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`general surgery services. Geisinger and Evangelical also recognize that they
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`compete to win patients at the expense of the other.
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`19. The competition between Geisinger and Evangelical to attract patients
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`is reflected in their plans for capital investments. When planning for the future,
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`competition between Geisinger and Evangelical affects the capital investments
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`each chooses to make. For example, in 2016, when Evangelical’s CEO was
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`explaining to the hospital’s board why she recommended constructing a new
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`orthopedic facility, she said that Evangelical was “vulnerable to GMC [Geisinger
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`Medical Center] in orthopedics.” Similarly, in considering capital expenditures for
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`certain improvements to its facilities in 2018, Geisinger cited Evangelical’s
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`competitive activities.
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`20. Geisinger and Evangelical also compete against each other in their
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`negotiations with insurers. For example, insurers have used Evangelical’s lower
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`prices for inpatient general acute-care services to negotiate lower prices for those
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`services from Geisinger.
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`21. Geisinger and Evangelical also have engaged in direct price
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`competition for members of several religious communities that include Amish and
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`Mennonite practitioners, who Defendants refer to as the “Plain Community.”
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`Members of the Plain Community generally pay their medical bills directly and do
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`not rely on any form of health insurance. In 2018, for example, an Evangelical
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 8 of 34
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`physician obtained, and circulated to Evangelical executives, Geisinger’s then-
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`current Plain Community discount program. After learning about Geisinger’s
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`newly lowered prices, Evangelical lowered its prices in response, and
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`Evangelical’s CFO sent a letter to members of the Plain Community with the new
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`pricing “[s]o that they would know that our rates were lower.” Evangelical’s CEO
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`observed that Plain Community business “has recently become more competitive
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`as Geisinger has significantly reduced its prices,” prompting Evangelical “to
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`reduce its prices to the Plain Community in order to remain competitive.”
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`B. Recognizing that a full merger would create an illegal
`“monopoly,” Geisinger proposed a partial acquisition that would
`increase coordination
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`22. As early as 2016, Geisinger had identified that “[a]lignment” with
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`Evangelical would provide it with “[d]efensive positioning against expansion by
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`[UPMC] and/or affiliation with [another] competitor.” When Geisinger learned
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`that Evangelical had engaged in a process to find a strategic partner or acquirer,
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`Geisinger was concerned that Evangelical would partner with a different hospital
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`system.
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`23. Geisinger would have strongly preferred to fully acquire Evangelical
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`and initially submitted a bid for a full acquisition, as it has done in the past with
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`other community hospitals. Given the competition described above, however,
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`Defendants quickly recognized that a full acquisition would likely violate the
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`8
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 9 of 34
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`antitrust laws. Evangelical’s CEO explained in a video interview that “the state
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`and federal government looks at these kinds of things for antitrust . . . and you
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`can’t create a monopoly. And so you know the reality of it is even if they wanted
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`to, Geisinger would not have been able to acquire us.” Geisinger’s documents
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`similarly note that a full acquisition of Evangelical “[p]resented serious anti-trust
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`concerns.”
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`24.
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`Instead of a full merger, Geisinger and Evangelical concocted the
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`complicated partial-acquisition agreement at issue in this case, in part, to avoid
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`antitrust scrutiny. After the letter of intent for the agreement was signed, for
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`example, a senior employee at Geisinger wrote that the agreement was “[k]inda
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`smart really” because it “[d]oes not require AG [Attorney General] approval.”
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`Nevertheless, the Antitrust Division learned of the agreement and opened an
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`antitrust investigation shortly after the agreement was executed.
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`25.
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`Initially, Defendants’ partial-acquisition agreement was replete with
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`provisions evidencing Geisinger’s intent to substantially limit competition by
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`controlling its close competitor and replacing competition with “cooperation” (as
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`would occur in a full merger), such as Geisinger’s right to appoint six members to
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`the Evangelical board of directors, the potential for Geisinger to fund revenue lost
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`by Evangelical, proposed joint ventures in areas where Defendants historically
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`competed, and Geisinger’s right to have a say in who would be Evangelical’s Chief
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 10 of 34
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`Executive Officer. As a senior Geisinger employee testified, “one of Geisinger’s
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`objectives was to integrate . . . to the fullest extent possible.”
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`26. Defendants twice amended their partial-acquisition agreement in
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`response to some of Plaintiff’s concerns. Nevertheless, the provisions of the
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`transaction illuminate Geisinger’s motivation for doing this deal, which survives
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`despite these amendments. More importantly, the anticompetitive effects of the
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`agreement also survive. The amendments simply do not rectify the fundamental
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`problems with the agreement: Geisinger has acquired a significant ownership
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`interest in its close competitor and imposed significant entanglements between the
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`two, likely leading to an impermissible substantial lessening of competition
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`between Geisinger and Evangelical.
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`27. As with a full merger, this partial-acquisition transaction would lessen
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`competition between Geisinger and Evangelical as they cooperate and look for
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`“wins” for both firms. As Evangelical’s CEO described in an interview discussing
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`the deal, “there’s an economic principle called co-opetition. And you can
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`cooperate, and you can compete. And as long as both sides find wins, it works.”
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`Such statements are predictive of how these close competitors are likely to behave
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`if this transaction is allowed to proceed: they will coordinate their activity to “find
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`wins” at the expense of robust competition. Consumers will be on the losing end
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`of this bargain as prices increase and access to high-quality services is diminished.
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 11 of 34
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`C. The transaction is likely to substantially lessen competition
`between Geisinger and Evangelical
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`28. Defendants’ transaction links Geisinger and Evangelical together in a
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`number of ways that fundamentally alter the relationship between them, reducing
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`their incentives to attract all patients away from each other by competing on the
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`quality, scope, and availability of inpatient general acute-care services. The
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`agreement also is likely to lead Geisinger to raise prices to commercial insurers
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`and other purchasers of inpatient general acute-care services, resulting in harm to
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`the consumer.
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`29. Financial entanglement. Under the agreement, Geisinger has
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`acquired a 30% interest in Evangelical, its close rival. In exchange, Geisinger has
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`committed to pay $100 million to Evangelical over the next several years and is
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`poised to remain a critical source of funding to Evangelical for the foreseeable
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`future. The $100 million consists of $90 million in cash—$88 million of which is
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`earmarked for specified projects approved by Geisinger and $2 million of which is
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`for unspecified projects that Geisinger must approve—and $10 million in
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`attributed value for intellectual property that Geisinger would license to
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`Evangelical.
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`30. These financial arrangements establish an indefinite partnership
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`between Evangelical and Geisinger. As a senior Geisinger employee put it,
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 12 of 34
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`through this investment, Evangelical is “tied to us” so “they don’t go to a
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`competitor.” As a result, Evangelical is likely to avoid competing to enhance the
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`quality or scope of the services it offers, which would attract patients from
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`Geisinger, its part owner.
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`31. This financial entanglement also reduces Geisinger’s incentives to
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`compete by investing in improvements that would attract patients from
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`Evangelical. If Geisinger expands its services or improves the quality of its
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`services in areas in which it competes with Evangelical, it would attract patients at
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`Evangelical’s expense, reducing the value of Geisinger’s 30% interest in
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`Evangelical.
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`32. Thus, as a result of this transaction, both Defendants have the
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`incentive to pull their competitive punches—incentives that would not exist in the
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`absence of the agreement.
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`33.
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`Improper influence. The agreement also gives Geisinger influence
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`over Evangelical, including over its ability to partner with others in the future. The
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`agreement gives Geisinger rights of first offer and first refusal with respect to any
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`future joint venture, competitively significant asset sale, or change-of-control
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`transaction by Evangelical, which ensures that Geisinger will have the opportunity
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`to interfere if Evangelical attempts to enter into any of these transactions with a
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`healthcare entity other than Geisinger. These rights deter collaborations between
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 13 of 34
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`Evangelical and other entities that compete with Geisinger because Geisinger is
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`given advance notice and is able to delay or prevent the collaboration. Such
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`collaborations are and have been an important dimension of quality competition
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`among hospitals. For example, if Evangelical wanted to enter into a joint venture
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`with a health system to enhance its cardiology services to better compete against
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`Geisinger, Geisinger would receive advance notice and could exercise its rights of
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`first offer or first refusal to attempt to prevent this competition.
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`34. Geisinger can also improperly influence Evangelical through its right
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`to approve Evangelical’s use of funds. The agreement allocates funds to
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`Evangelical for specific projects or service-line initiatives in specified amounts
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`(e.g., $20 million for women’s health initiatives), including $2 million for “other
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`mutually agreeable Strategic Project Investment projects.” In addition, if
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`Evangelical wants to spend any funds originating from Geisinger for purposes
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`other than those described in the agreement, it needs Geisinger’s approval. The
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`transaction affords Geisinger the right to withhold that approval if it believes that
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`the project would enable Evangelical to compete in a way that Geisinger does not
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`like.
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`35. Less independent expansion and more anticompetitive cooperation.
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`For years, Evangelical has independently expanded in a number of service lines
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`that compete for patients against service lines offered by Geisinger. The
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 14 of 34
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`agreement, however, lessens Evangelical’s incentives to expand because it likely
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`will not want to bite the hand that feeds it by disrupting its relationship with
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`Geisinger. Evangelical instead may seek to cooperate with Geisinger, effectively
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`agreeing not to compete. For example, after the transaction with Geisinger, an
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`Evangelical executive deleted recommendations to independently expand
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`Evangelical’s orthopedic offerings from a draft of Evangelical’s three-year
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`strategic plan and instead focused on Evangelical’s partnership with Geisinger in
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`this area. Orthopedics is a service line in which Evangelical historically has
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`competed closely with Geisinger, to the benefit of patients who need orthopedic
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`care. Even though Defendants claim to have abandoned the joint venture involving
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`orthopedic services that was originally described in the partial-acquisition
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`agreement, if this transaction is not rescinded or enjoined, they are more likely to
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`avoid competition with each other as a result of their financial and other
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`entanglements.
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`36. Sharing of competitively sensitive information. Further facilitating
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`coordination, the transaction provides the means for Geisinger and Evangelical to
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`share competitively sensitive information by enabling ongoing interactions
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`between them. For example, the agreement provides the opportunity and means
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`for Defendants to share competitively sensitive information when Evangelical
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`requests that Geisinger disburse funds for strategic projects under the agreement
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 15 of 34
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`because the agreement requires that these requests be “supported by appropriate
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`business plans.” This request necessarily would require sharing competitively
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`sensitive information.
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`37. The transaction also requires Evangelical to inform Geisinger about
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`any strategic partnerships, joint ventures, or other major transactions with other
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`hospital systems before those transactions are executed. In addition, Geisinger’s
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`approval rights over certain Evangelical capital improvements provide additional
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`opportunities for Defendants to inappropriately share competitively sensitive
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`information. These requirements will give Geisinger advance notice of its
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`competitor’s strategic moves and will facilitate discussions between Geisinger and
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`Evangelical about Evangelical’s strategic plans.
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`38. Evangelical has publicly stated that it already has cooperative
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`relationships with Geisinger, which increases the likelihood that Defendants will
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`share such competitively sensitive information. In fact, Defendants have already
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`shared important competitive information as part of the agreement. In discussions
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`regarding joint ventures, Evangelical’s CEO sent her counterpart at Geisinger a
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`document that detailed her thinking on Evangelical’s strategic growth options. The
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`transaction continues to contemplate joint ventures between the Defendants, and
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`the inappropriate sharing of competitively sensitive information is likely to
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`continue.
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 16 of 34
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`39.
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`Increased prices. The transaction also creates incentives for
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`Geisinger to raise prices to commercial insurers and other purchasers of inpatient
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`general-acute care services. Because Geisinger now owns 30% of Evangelical, it
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`benefits when patients choose Evangelical instead of Geisinger because the value
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`of its ownership interest in Evangelical increases. This ability to partially recover
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`the value of lost patients through its ownership of Evangelical gives Geisinger
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`greater bargaining leverage in negotiations with insurers and the ability to set
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`higher prices for patients who lack insurance.
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`D. Defendants have a history of picking and choosing when to
`compete with each other, which this partial acquisition will
`exacerbate, deepening coordination at the expense of competition
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`40. Although Geisinger and Evangelical are competitors for patients in
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`central Pennsylvania, they have previously engaged in coordinated behavior,
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`picking and choosing when to compete and when not to compete. This tendency to
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`coordinate their competitive behavior is reflected by Evangelical’s CEO’s view of
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`“co-opetition.”
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`41. Defendants’ prior acts of coordination, which are beneficial only to
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`themselves, reinforce their dominant position for inpatient general acute-care
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`services in central Pennsylvania. Defendants’ coordination comes at the expense
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`of greater competition and has taken various forms:
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 17 of 34
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`Leaders from Defendants have had “regular touch base meetings,” in
`which they discussed a variety of topics, including strategic growth
`options.
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`Geisinger has shared with Evangelical the terms of its loan
`forgiveness agreement, which Geisinger uses as an important tool to
`recruit physicians.
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`Geisinger and Evangelical established a co-branded urgent-care center
`in Lewisburg that included a non-compete clause. As Evangelical’s
`head of marketing explained to the board, the venture allowed
`Evangelical “to build volume to our urgent care with Geisinger as a
`partner rather than potentially as a competitor.”
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`42. More concerning, senior executives of Defendants entered into an
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`agreement not to recruit each other’s employees—a so-called no-poach agreement.
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`Defendants’ no-poach agreement—an agreement between competitors, reached
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`through verbal exchanges and confirmed by email from senior executives—
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`reduces competition between them to hire hospital personnel and therefore directly
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`harms healthcare workers seeking competitive pay and working conditions.
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`Defendants have monitored each other’s compliance with this unlawful agreement,
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`and deviations have been called out in an effort to enforce compliance. For
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`example, after learning that nurses at Evangelical were being recruited by
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`Geisinger via Facebook, the CEO of Evangelical wrote to her counterpart at
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`Geisinger, asking: “Can you please ask that this stop[?] Very counter to what we
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`are trying to accomplish.” After receiving the message, the Geisinger executive
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`forwarded the email to Geisinger’s Vice President of Talent Acquisition, instructing
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 18 of 34
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`her to “ask your staff to stop this activity with Evangelical.” Defendants’ no-poach
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`agreement works to insulate Defendants’ businesses from competition for
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`healthcare professionals.
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`43. This history of coordination between Defendants increases the risk
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`that the additional entanglements created by the partial-acquisition agreement will
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`lead Geisinger and Evangelical to coordinate even more closely at the expense of
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`consumers when it is beneficial for them to do so. Moreover, this history makes
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`clear that Defendants’ self-serving representations about their intent to continue to
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`compete going forward—despite all of the entanglements created by the partial-
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`acquisition agreement—cannot be trusted.
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`IV. THE RELEVANT MARKET
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`A. Inpatient general acute-care services are a relevant product market
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`44. A relevant product market in which to analyze the effects of the
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`partial-acquisition agreement is the sale of inpatient general acute-care services.
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`This product market encompasses a broad cluster of inpatient medical and surgical
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`diagnostic and treatment services offered by both Geisinger and Evangelical that
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`require an overnight hospital stay, including many orthopedic, cardiovascular,
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`women’s health, and general surgical services.
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`45.
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`It is appropriate to evaluate the agreement’s likely effects across the
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`cluster of inpatient general acute-care services. These specific services are not
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 19 of 34
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`substitutes for each other (e.g., obstetrics care is not a substitute for hip
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`replacement surgery), but it is appropriate to consider them within one relevant
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`product market because the services are offered to patients under similar
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`competitive conditions by similar market participants. There are no practical
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`substitutes for this cluster of inpatient general acute-care services.
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`46. The relevant market excludes outpatient services and specialized
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`services that are offered by Geisinger but not Evangelical because these services
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`are offered under different competitive conditions than inpatient general acute-care
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`services. Outpatient services are services that generally do not require an
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`overnight hospital stay, and some outpatient services are provided in settings other
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`than hospitals. Health plans and the vast majority of patients who use inpatient
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`general acute-care services would not switch to outpatient services in response to a
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`price increase. Similarly, the relevant market excludes the more specialized
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`services that are offered by Geisinger but not Evangelical, such as certain advanced
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`cancer services and organ transplants. These services treat medical conditions that
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`require more specialized medical training or equipment, so patients have a
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`different set of competitive options for them.
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`19
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 20 of 34
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`B. The six-county area in central Pennsylvania is a relevant geographic
`market
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`47. The relevant geographic market is no larger than the six-county area
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`that comprises the Pennsylvania counties of Union, Snyder, Northumberland,
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`Montour, Lycoming, and Columbia (the “six-county area”). This area
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`encompasses the cities of Danville and Lewisburg, where Geisinger Medical
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`Center and Evangelical are respectively located. The hospitals are approximately
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`17 miles apart. The map below illustrates the relevant geographic market and the
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`locations of the hospitals in it.
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`20
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 21 of 34
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`48. The Horizontal Merger Guidelines (“Merger Guidelines”) issued by
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`the U.S. Department of Justice and Federal Trade Commission set forth the
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`relevant test for geographic market definition: whether a hypothetical monopolist
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`of the relevant services within the geographic area could profitably impose a small
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`but significant and non-transitory increase in price (here, reimbursement rates for
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`inpatient general acute-care services). If so, the boundaries of that geographic area
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`are an appropriate geographic market.
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`49.
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`In this case, a hypothetical monopolist of inpatient general acute-care
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`services within the six-county area could profitably impose a small but significant
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`and non-transitory increase in the price of inpatient general acute-care services for
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`at least one hospital in the six-county area. In general, patients choose to seek care
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`close to their homes or workplaces, and residents of the six-county area also prefer
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`to obtain inpatient general acute-care services locally. Thus, the availability of
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`these services outside of the six-county area is not sufficient to prevent a
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`hypothetical monopolist from profitably imposing a price increase.
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`50.
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`In addition, health plans that offer healthcare networks in the six-
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`county area do not consider hospitals outside of that area to be reasonable
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`substitutes in their networks for hospitals within that area. Because residents of the
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`six-county area strongly prefer to obtain inpatient general acute-care services from
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`within the six-county area, a health plan that did not have hospitals in the six-
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`21
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 22 of 34
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`county area likely could not successfully market a network to employers and
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`patients in the area. Thus, a health plan would not exclude from its network a
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`hypothetical monopolist of all inpatient general acute-care services in the six-
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`county area in response to a small but significant price increase.
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`V. ANTICOMPETITIVE EFFECTS
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`A. The market for inpatient general acute-care services in central
`Pennsylvania is highly concentrated
`51. Market concentration is one useful indicator of the level of
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`competitive vigor in a market and of the likely competitive effects of a transaction
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`involving competitors. The more concentrated a market, and the more a
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`transaction would increase concentration in a market, the more likely it is that a
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`transaction—even a partial acquisition—will result in a meaningful reduction in
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`competition.
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`52. Geisinger currently accounts for approximately 55% of inpatient
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`general acute-care services provided in the six-county area. Evangelical accounts
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`for approximately 17% of that market. Defendants together thus account for
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`approximately 71% of the relevant market. Defendants’ internal documents report
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`shares that are consistent with these shares for inpatient general acute-care services
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`in general and for many service lines. The other competitor of significance in the
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`six-county area is the University of Pittsburgh Medical Center (“UPMC”), which
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`22
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`Case 4:20-cv-01383-MWB Document 1 Filed 08/05/20 Page 23 of 34
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`operates two hospitals in Williamsport and Muncy. UPMC also used to operate a
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`hospital in Sunbury,
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