United States v. Mercy Health Services
United States District Court for the Northern District of Iowa
902 F. Supp. 968 (1995)
- Written by John Reeves, JD
Facts
The United States (plaintiff) brought suit against Mercy Health Services (Mercy) and Finley Tri-States Health Group, Inc. (Finley) (defendants), under § 1 of the Sherman Act and § 7 of the Clayton Act. Mercy and Finley—both hospitals—sought to merge, and the government sought injunctive relief blocking the merger on the ground that it would substantially lessen competition. Mercy and Finley were located within six blocks of each other. No other hospitals of their size or that provided services on their level were within 70 miles. The government relied on traditional notions of healthcare and health insurance, under which a patient would typically remain loyal to single medical provider within a particular region. The government argued that given this definition of the relevant geographic market, the merger violated antitrust law. But at the time of the lawsuit, new developments had taken place in the medical-care and medical-insurance industries. These included the rise of health-maintenance-organization (HMO) and preferred-provider-organization (PPO) medical insurance, both of which emphasized cost savings and in many instances required patients to go to specific providers, regardless of geography. In addition, as part of their outreach efforts to respond to these new developments, hospitals—including Mercy and Finley—were by this point opening clinics in areas not traditionally considered to be from where they would receive patients. The government moved for an injunction blocking the merger.
Rule of Law
Issue
Holding and Reasoning (Melloy, C.J.)
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