[Federal Register Volume 86, Number 175 (Tuesday, September 14, 2021)]
[Notices]
[Pages 51183-51196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19800]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Evangelical Community Hospital, et ano; Response 
to Public Comments

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the Response to 
Public Comments on the Proposed Final in United States v. Evangelical 
Community Hospital and Geisinger Health, Civil Action No. 4:20-cv-
01383-MWB, which was filed in the United States District Court for the 
Middle District of Pennsylvania on August 31, 2021, together with a 
copy of the five comments received by the United States.
    A copy of the comments and the United States' response to the 
comments is available at https://www.justice.gov/atr/case/us-v-geisinger-health-and-evangelical-community-hospital. Copies of the 
comments and the United States' response are available for inspection 
at the Office of the Clerk of the United States District Court for the 
Middle District of Pennsylvania. Copies of these materials may also be 
obtained from the Antitrust Division upon request and payment of the 
copying fee set by Department of Justice regulations.

Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.

United States District Court for the Middle District of Pennsylvania

    United States of America, Plaintiff, v. Evangelical Community 
Hospital and Geisinger Health, Defendants.

Civil Action No.: 4:20-cv-01383-MWB

Response of Plaintiff United States

To Public Comments on the Proposed Final Judgment

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act (the ``APPA'' or ``Tunney Act''), 15 U.S.C. 16(b)-(h), 
the United States submits this response to the five public

[[Page 51184]]

comments received regarding the proposed Final Judgment, as amended, in 
this case. After carefully considering the submitted comments, the 
United States continues to believe that the amended proposed Final 
Judgment will provide an effective and appropriate remedy for the 
antitrust violations alleged in the Complaint and is therefore in the 
public interest. The United States will move the Court for entry of the 
amended proposed Final Judgment (Dkt. 51-1) after the public comments 
and this response have been published pursuant to 15 U.S.C. 16(d).

I. Procedural History

    On February 1, 2019, Defendant Geisinger Health (``Geisinger'') and 
Defendant Evangelical Community Hospital (``Evangelical'') entered into 
a partial-acquisition agreement (the ``Collaboration Agreement'') 
pursuant to which Geisinger would, among other things, acquire 30% of 
Evangelical. After a thorough and comprehensive investigation, the 
United States filed a civil antitrust Complaint (Dkt. 1) on August 5, 
2020, seeking to rescind and enjoin the Collaboration Agreement, which 
Defendants had twice amended before the United States filed its 
Complaint.
    On March 3, 2021, the United States filed a proposed Final Judgment 
(Dkt. 45-2) and a Stipulation and Order (Dkt. 45-1), signed by the 
parties, that consents to entry of the proposed Final Judgment after 
compliance with the requirements of the APPA. At the same time, the 
United States filed a Competitive Impact Statement, describing the 
transaction and the proposed Final Judgment (Dkt. 46). The Court 
entered the Stipulation and Order on March 10, 2021 (Dkt. 47).
    On March 10, 2021, the United States published the Complaint, 
proposed Final Judgment, and Competitive Impact Statement in the 
Federal Register, see 15 U.S.C. 16(b)-(c); 86 FR 13,735 (March 10, 
2021), and caused notice regarding the same, together with directions 
for the submission of written comments relating to the proposed Final 
Judgment, to be published in the Washington Post on March 8-14 and in 
The Daily Item on March 9-14 and March 16.
    On May 17, 2021, the United States and Defendants filed a Joint 
Notice of Amended Proposed Final Judgment (the ``Joint Notice''), 
attaching an amended proposed Final Judgment (Dkts. 51, 51-1). As 
stated in the Joint Notice, the amended proposed Final Judgment removed 
provisions from the Collaboration Agreement (including its attachments) 
that did not conform with the proposed Final Judgment and corrected 
typographical errors in those documents. The amended proposed Final 
Judgment is identical in all respects to the original proposed Final 
Judgment except for a change to the definition of the ``Amended and 
Restated Collaboration Agreement'' to reflect the date of execution and 
title of the revised, updated agreement--the Second Amended and 
Restated Collaboration Agreement (the ``Amended Agreement'').
    The 60-day period for public comment ended on May 17, 2021. The 
United States determined that it would consider any additional comments 
that were received by June 7, 2021, in order to afford the public time 
to review the Joint Notice and the amended proposed Final Judgment. The 
United States received five comments. As required by the APPA, the 
comments, with the authors' addresses removed, and this response will 
be published in the Federal Register.

II. Standard of Judicial Review

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the Court, in accordance with the statute as amended in 2004, is 
required to consider:

(A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative 
remedies actually considered, whether its terms are ambiguous, and 
any other competitive considerations bearing upon the adequacy of 
such judgment that the court deems necessary to a determination of 
whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the Court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., 
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the 
``court's inquiry is limited'' in APPA settlements); United States v. 
InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 
(D.D.C. Aug. 11, 2009) (noting that a court's review of a consent 
judgment is limited and only inquires ``into whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanism to enforce the final judgment are clear and manageable'').
    As the U.S. Court of Appeals for the District of Columbia Circuit 
has held, under the APPA a court considers, among other things, the 
relationship between the remedy secured and the specific allegations in 
the government's complaint, whether the proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may not ``make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at 
*3. Instead, ``[t]he balancing of competing social and political 
interests affected by a proposed antitrust consent decree must be left, 
in the first instance, to the discretion of the Attorney General.'' W. 
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court 
should bear in mind the flexibility of the public interest inquiry: The 
court's function is not to determine whether the resulting array of 
rights and liabilities is one that will best serve society, but only to 
confirm that the resulting settlement is within the reaches of the 
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted); see also United States v. Deutsche Telekom AG, No. 19-2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding 
requirements would ``have enormous practical consequences for the 
government's ability to negotiate future settlements,'' contrary to 
congressional intent. Microsoft, 56 F.3d at 1456. ``The Tunney Act was 
not intended to create a disincentive to the use of the consent 
decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due

[[Page 51185]]

respect to the Justice Department's . . . view of the nature of its 
case''); United States v. Iron Mountain, Inc., 217 F. Supp. 3d 146, 
152-53 (D.D.C. 2016) (``In evaluating objections to settlement 
agreements under the Tunney Act, a court must be mindful that [t]he 
government need not prove that the settlements will perfectly remedy 
the alleged antitrust harms[;] it need only provide a factual basis for 
concluding that the settlements are reasonably adequate remedies for 
the alleged harms.'' (internal citations omitted)); United States v. 
Republic Servs., Inc., 723 F. Supp. 2d 157, 160 (D.D.C. 2010) (noting 
``the deferential review to which the government's proposed remedy is 
accorded''); United States v. Archer-Daniels-Midland Co., 272 F. Supp. 
2d 1, 6 (D.D.C. 2003) (``A district court must accord due respect to 
the government's prediction as to the effect of proposed remedies, its 
perception of the market structure, and its view of the nature of the 
case.''). The ultimate question is whether ``the remedies [obtained by 
the Final Judgment are] so inconsonant with the allegations charged as 
to fall outside of the `reaches of the public interest.' '' Microsoft, 
56 F.3d at 1461 (quoting W. Elec. Co., 900 F.2d at 309).
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged.''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using consent judgments proposed 
by the United States in antitrust enforcement, Public Law 108-237, 221, 
and added the unambiguous instruction that ``[n]othing in this section 
shall be construed to require the court to conduct an evidentiary 
hearing or to require the court to permit anyone to intervene,'' 15 
U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76 
(indicating that a court is not required to hold an evidentiary hearing 
or to permit intervenors as part of its review under the APPA). This 
language explicitly wrote into the statute what Congress intended when 
it first enacted the APPA in 1974. As Senator Tunney explained: ``[t]he 
court is nowhere compelled to go to trial or to engage in extended 
proceedings which might have the effect of vitiating the benefits of 
prompt and less costly settlement through the consent decree process.'' 
119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). ``A court can 
make its public interest determination based on the competitive impact 
statement and response to public comments alone.'' U.S. Airways, 38 F. 
Supp. 3d at 76 (citing Enova Corp., 107 F. Supp. 2d at 17).

III. The Harm Alleged in the Complaint and the Amended Proposed Final 
Judgment

    The amended proposed Final Judgment is the culmination of a 
thorough, comprehensive investigation conducted by the Antitrust 
Division of the United States Department of Justice. Based on the 
evidence gathered during the investigation, the United States concluded 
that the likely effect of Geisinger's partial acquisition of 
Evangelical resulting from the Collaboration Agreement would be to 
substantially lessen competition and unreasonably restrain trade in the 
market for the provision of inpatient general acute-care services in a 
six-county region in central Pennsylvania. The partial acquisition was 
not a passive investment by Geisinger. The Collaboration Agreement 
created certain entanglements between Defendants that provided 
opportunities for Geisinger to influence Evangelical, which would 
likely lead to higher prices, lower quality, and reduced access to 
inpatient general acute-care services in central Pennsylvania. 
Accordingly, the United States filed a civil antitrust lawsuit that 
alleged that certain features of the Collaboration Agreement, taken 
together, were likely to substantially lessen competition between 
Defendants, and sought to rescind and enjoin the Collaboration 
Agreement because it violated Section 1 of the Sherman Act, 15 U.S.C. 
1, and Section 7 of the Clayton Act, 15 U.S.C. 18.
    The amended proposed Final Judgment provides an effective and 
appropriate remedy for the likely competitive harm the United States 
alleges would result from the Collaboration Agreement and maintains 
Evangelical's independence as a competitor in the market for inpatient 
general acute-care services in central Pennsylvania. The amended 
proposed Final Judgment restores competition by: (1) Capping 
Geisinger's ownership interest in Evangelical; (2) preventing Geisinger 
from exerting control or influence over Evangelical through the 
mechanisms alleged in the Complaint; and (3) requiring an antitrust 
compliance program and prohibiting Geisinger and Evangelical from 
sharing competitively sensitive information--all of which restore 
Defendants' incentives to compete with each other on quality, access, 
and price. At the same time, the amended proposed Final Judgment 
permits Evangelical to use Geisinger's passive investment to fund 
specific projects that will benefit patients and the community.

A. Reduction of Ownership Interest and Investment

    The amended proposed Final Judgment caps Geisinger's ownership 
interest in Evangelical to a 7.5% passive investment and prohibits 
Geisinger from increasing its ownership interest in Evangelical.\1\ The 
amended proposed Final Judgment permits Evangelical to spend the money 
that it has already received from Geisinger only on two specific 
projects that will benefit patients in central Pennsylvania: (1) 
Improving Evangelical's patient rooms and (2) sponsoring a local 
recreation and wellness center.\2\ It also prohibits Geisinger from 
making any loan, providing any line of credit, or providing a guaranty 
to Evangelical against any financial loss.\3\ These provisions of the 
amended proposed Final Judgment, along with the others described below, 
eliminate mechanisms for Geisinger to influence Evangelical through its 
investment and restore the incentives of both hospitals to compete with 
each other for the benefit of patients and health insurers.
---------------------------------------------------------------------------

    \1\ Amended proposed Final Judgment ] IV.B.2.
    \2\ Amended proposed Final Judgment ] V.A.
    \3\ Amended proposed Final Judgment ]] IV.B.3, 6.
---------------------------------------------------------------------------

B. Prohibitions Against Geisinger's Influence and Control Over 
Evangelical

    The amended proposed Final Judgment maintains Evangelical's 
independence as a competitor in the relevant market because it prevents 
Geisinger from exercising influence over

[[Page 51186]]

Evangelical through participation in Evangelical's governance, 
management, or strategic decision-making. For example, the amended 
proposed Final Judgment prohibits Geisinger from appointing any 
directors to Evangelical's board of directors and prohibits Geisinger 
from obtaining any management or leadership position with Evangelical 
that would provide Geisinger with the ability to influence its 
strategic or competitive decision-making.\4\ In addition, it prohibits 
Geisinger from controlling Evangelical's expenditure of funds.\5\ The 
amended proposed Final Judgment also prevents Geisinger from having any 
right of first offer or first refusal regarding any proposal or offer 
made to Evangelical, such as proposals to enter into future joint 
ventures with other entities or to enter into competitively significant 
asset sales.\6\ In addition, the amended proposed Final Judgment 
prohibits Defendants from entering into joint ventures with each other 
or making changes to the Amended Agreement without obtaining the 
approval of the United States.\7\ The amended proposed Final Judgment 
also prohibits Geisinger from licensing its information technology 
systems to Evangelical without the consent of the United States, except 
as expressly permitted in the amended proposed Final Judgment.\8\
---------------------------------------------------------------------------

    \4\ Amended proposed Final Judgment ]] IV.B.1, 4.
    \5\ Amended proposed Final Judgment ] IV.B.6.
    \6\ Amended proposed Final Judgment ] IV.B.5.
    \7\ Amended proposed Final Judgment ]] IV.E, F.
    \8\ Amended proposed Final Judgment ] IV.B.7.
---------------------------------------------------------------------------

C. Compliance Program and Prohibitions Against Sharing Competitively 
Sensitive Information

    The amended proposed Final Judgment eliminates the provisions of 
the Collaboration Agreement that would have provided Geisinger with the 
ability to access Evangelical's competitively sensitive information and 
prohibits Defendants from providing each other with non-public 
information, including information about strategic projects being 
considered by either Defendant.\9\ It also prevents Defendants from 
having access to each other's financial records and requires that 
Defendants implement and maintain a firewall to prevent them from 
sharing competitively sensitive information.\10\
---------------------------------------------------------------------------

    \9\ Amended proposed Final Judgment ] IV.G.
    \10\ Amended proposed Final Judgment ] IV.G, VII.A.
---------------------------------------------------------------------------

    In addition, the amended proposed Final Judgment requires 
Defendants to institute a robust antitrust compliance program.\11\ 
Finally, the amended proposed Final Judgment provides the United States 
with the ability to investigate Defendants' compliance with the Final 
Judgment and expressly retains and reserves all rights for the United 
States to enforce provisions of the Final Judgment. \12\
---------------------------------------------------------------------------

    \11\ Amended proposed Final Judgment Sec.  VI.
    \12\ Amended proposed Final Judgment Sec. Sec.  VIII, XI.
---------------------------------------------------------------------------

    In sum, the amended proposed Final Judgment prevents Geisinger from 
increasing its ownership interest in Evangelical, eliminates the 
anticompetitive portions of the Collaboration Agreement that were 
challenged in the Complaint, and prevents Defendants from reinstituting 
those anticompetitive provisions. It restores Defendants' incentives to 
compete with each other on quality, access, and price, and maintains 
Evangelical as an independent competitor for inpatient general acute-
care services in central Pennsylvania.

IV. Summary of Public Comments and the United States' Response

    The United States received five public comments. Four comments are 
from community members who live in central Pennsylvania. The fifth 
comment is from a competitor to Geisinger and Evangelical, the 
University of Pittsburgh Medical Center (``UPMC''). UPMC is an 
integrated healthcare system that operates two hospitals and UPMC 
Health Plan, an insurance company that sells commercial health 
insurance in competition with a Geisinger-operated insurance company, 
Geisinger Health Plan, in central Pennsylvania.
    The United States summarizes the comments and responds below. The 
comments do not support a finding that the amended proposed Final 
Judgment is not in the public interest, and the modifications that UPMC 
proposes to the amended proposed Final Judgment are not necessary or 
appropriate to address the loss of competition alleged in the 
Complaint.

A. The Amended Proposed Final Judgment Resolves the Concerns Expressed 
by Four Community Members

    Four community members express concern that, if Geisinger were 
allowed to control Evangelical, it could negatively affect patient care 
and reduce choices for consumers. One commenter states that 
``Evangelical can give patients the best care by remaining an 
independent community hospital.'' \13\ Another commenter states that 
she has ``all of [her] care given at Evangelical,'' and ``would hate to 
have that spoiled'' by having Evangelical controlled by Geisinger, and 
believes that they should not merge.\14\ Another commenter notes that 
prior mergers in the area left the community with ``few options [for] 
quality and affordable healthcare'' and urges the United States ``to 
make sure [that] people looking for good affordable health care have 
that choice.'' \15\ The United States agrees with these commenters that 
consumers are best served by preserving Evangelical's independence, 
which is why the United States initiated this litigation and has 
required Geisinger to relinquish its ability to influence or control 
Evangelical through the terms of the amended proposed Final Judgment. 
Because the amended proposed Final Judgment preserves Evangelical's 
independence, and prohibits Geisinger from acquiring Evangelical, it 
fully addresses these commenters' concerns. These comments, therefore, 
provide no basis to conclude that the amended proposed Final Judgment 
is not in the public interest.
---------------------------------------------------------------------------

    \13\ Comment from Sandy Young, attached as Exhibit E.
    \14\ Comment from Carol Barsh, attached as Exhibit A.
    \15\ Comment from Keith Young, attached as Exhibit D.
---------------------------------------------------------------------------

    One of the community members expresses concern about Geisinger's 
7.5% interest in Evangelical and raises questions about Evangelical's 
financial circumstances. The commenter also notes that the settlement 
addresses harm the United States alleged with respect to inpatient 
services and asks what would prevent Geisinger from expanding 
outpatient services to compete with those offered by Evangelical.\16\ 
This commenter does not ask the Court to reject the proposed remedy and 
does not propose any specific measures to be incorporated into the 
amended proposed Final Judgment.
---------------------------------------------------------------------------

    \16\ Comment from Dr. Steve Karp, attached as Exhibit B. Dr. 
Karp's comment also raised questions about Evangelical's receiving 
financial support for information technology systems from Geisinger. 
This concern was also raised by UPMC and is discussed in Section 
IV.B.2, infra.
---------------------------------------------------------------------------

    This comment likewise provides no basis to conclude that the 
amended proposed Final Judgment is not in the public interest. First, 
as discussed above, the amended proposed Final Judgment ensures that 
Evangelical will remain an independent competitor by capping 
Geisinger's interest in Evangelical and stripping Geisinger of the 
ability to influence or control Evangelical. Second, the proposed 
remedy does not place Evangelical on insecure financial footing as 
Evangelical was in a strong financial position before it executed the 
agreement with Geisinger (see Complaint ] 65), and nothing in the 
amended proposed Final Judgment changes its financial status.

[[Page 51187]]

Third, the commenter's concern about Geisinger expanding in the 
outpatient market is outside the scope of this Court's review under the 
APPA as the United States did not allege harm in an outpatient services 
market. See Microsoft, 56 F.3d at 1459; U.S. Airways, 38 F. Supp. 3d at 
76. It is also misplaced as the proposed remedy maintains Evangelical's 
independence and preserves Defendants' incentives to compete for both 
inpatient and outpatient services. Indeed, if Geisinger expands 
outpatient services to compete with those offered by Evangelical, that 
would increase competition and benefit patients in central 
Pennsylvania.

B. UPMC's Comment Provides No Basis To Conclude That the Amended 
Proposed Final Judgment Is Not in the Public Interest

    UPMC's comment raises concerns regarding two aspects of the Amended 
Agreement.\17\ First, UPMC questions provisions that establish the 
terms under which Evangelical, a small community hospital, provides 
medical services to patients insured by Geisinger Health Plan 
(``GHP''), a health insurance company owned by Geisinger. UPMC claims 
these provisions will reduce competition between Evangelical and 
Geisinger to provide medical and hospital services and create an 
incentive for Evangelical to charge higher prices to third-party 
insurance companies such as UPMC Health plan (UPMC, like Geisinger, is 
vertically integrated, offering both health insurance and hospital 
services). Second, UPMC expresses concerns about Geisinger's providing 
subsidized electronic medical records systems and associated support to 
Evangelical, as permitted in Paragraph V.B of the amended proposed 
Final Judgment (the ``IT Subsidy''). As discussed below, these 
provisions do not undermine the remedy in the amended proposed Final 
Judgment.
---------------------------------------------------------------------------

    \17\ UPMC Comment, attached as Exhibit C.
---------------------------------------------------------------------------

1. The Margin Guarantee
    UPMC questions provisions that establish the terms under which 
Evangelical provides hospital and medical services to patients insured 
by GHP. Specifically, Evangelical and GHP have agreed that Evangelical 
will lower its prices to GHP for treating GHP insured patients, and GHP 
will, in return, place Evangelical in the most favorable tier of its 
fully insured, tiered commercial insurance plans. This sort of 
arrangement is common in the healthcare industry. By placing 
Evangelical in the most favorable tier, the expectation is that more 
GHP members will seek treatment from Evangelical, allowing Evangelical 
to maintain or increase its profit on these patients notwithstanding 
its lower prices. To further guarantee that Evangelical's lower prices 
will not reduce Evangelical's profits from treating GHP members, GHP 
has committed that Evangelical's profit (in dollars) on GHP's fully 
insured commercial business will remain the same or increase during the 
time that Evangelical provides these lower prices to GHP.\18\ This 
``Margin Guarantee'' thus protects Evangelical, a small hospital, from 
losing money as a result of offering GHP lower prices. UPMC, however, 
claims these provisions will reduce competition between Evangelical and 
Geisinger and create an incentive for Evangelical to charge higher 
prices to third-party insurance companies such as UPMC Health Plan.
---------------------------------------------------------------------------

    \18\ Second Amended and Restated Collaboration Agreement (Dkt. 
51-3) at Exh. D. If the volume of GHP insured patients is not 
sufficient on its own to maintain Evangelical's current level of 
profitability, GHP, under the Margin Guarantee, will adjust the 
rates it pays Evangelical to reach this threshold, which will not 
impact Evangelical's preferred tier status.
---------------------------------------------------------------------------

    In its Complaint, the United States did not allege competitive harm 
resulting from the Margin Guarantee.\19\ Therefore, UPMC's concerns 
regarding the Margin Guarantee are outside the scope of the Court's 
review under the APPA. See Microsoft, 56 F.3d at 1459; U.S. Airways, 38 
F. Supp. 3d at 76. Moreover, UPMC's concerns regarding the Margin 
Guarantee are unfounded for the following reasons. First, UPMC argues 
that the Margin Guarantee reduces competition between Evangelical and 
Geisinger because, absent the Margin Guarantee, GHP would have tried to 
steer patients toward Geisinger hospitals and physicians, while the 
Margin Guarantee gives GHP an incentive to have more patients treated 
at Evangelical. UPMC's argument, however, would apply to any 
arrangement that made Evangelical a more attractive or lower cost 
option for patients who are commercially insured by GHP. Under UPMC's 
reasoning, arrangements that are standard in the health insurance 
industry, such as a tiered network arrangement with a health insurance 
company that places Evangelical in the most favorable tier, would be 
improper, which is not the case. The Margin Guarantee simply ensures 
that Evangelical's profitability on GHP patients will not decrease as a 
result of offering GHP lower prices; at the same time, this arrangement 
is designed to save GHP money and benefit its members (e.g., through 
lower copays). Additionally, the amended proposed Final Judgment 
ensures that Geisinger and Evangelical will remain independent, and 
will thus have the incentive to compete against one another.
---------------------------------------------------------------------------

    \19\ The only allegation in the Complaint that relates to the 
Margin Guarantee is that ``Evangelical's placement in the most 
favored tier of Geisinger Health Plan's commercial insurance 
products does not require the partial-acquisition agreement.'' 
Complaint ] 66.
---------------------------------------------------------------------------

    Second, UPMC speculates that the Margin Guarantee gives Evangelical 
the incentive to raise rates to third-party insurers like UPMC Health 
Plan. If anything, however, the Margin Guarantee is likely to 
incentivize Evangelical to maximize the share of its patients that are 
insured by third-party insurers such as UPMC Health Plan, rather than 
incentivize it to increase prices to these entities. This is because 
any profit from third-party insurers would be in addition to the profit 
that Evangelical is already guaranteed to earn from GHP. UPMC argues 
that Evangelical's increasing the number of patients it sees from 
third-party insurers would violate the ``spirit'' of the Amended 
Agreement,\20\ but this is incorrect because the amended proposed Final 
Judgment maintains Evangelical's independence, preventing Geisinger 
from controlling or influencing Evangelical's negotiations with third-
party insurers.
---------------------------------------------------------------------------

    \20\ UPMC Comment at 10.
---------------------------------------------------------------------------

    Finally, to the extent UPMC raises concerns about potential 
information sharing between Evangelical and Geisinger relating to the 
Margin Guarantee, those concerns are unwarranted. Integrated insurer-
hospital systems like Geisinger and UPMC routinely obtain sensitive 
information from insurer negotiations with third-party hospital systems 
like Evangelical and must assure those hospital systems that the 
information will not be shared more broadly throughout the integrated 
organization. To the extent that UPMC is concerned that Evangelical 
will share sensitive information about the UPMC-Evangelical contract 
with GHP, UPMC, a large, sophisticated hospital system, can protect 
itself through its contract with Evangelical. Moreover, in this 
instance, the amended proposed Final Judgment requires Defendants to 
implement a firewall to prevent competitively sensitive information 
from being disclosed between Geisinger and Evangelical, providing an 
additional level of protection to prevent such improper disclosure.\21\ 
Should Defendants bypass the firewall and share competitively sensitive

[[Page 51188]]

information, the United States can seek relief from the Court under the 
Final Judgment or through antitrust laws that will continue to apply to 
Defendants.
---------------------------------------------------------------------------

    \21\ Amended proposed Final Judgment ] VII.A.
---------------------------------------------------------------------------

    UPMC's concerns as to the Margin Guarantee, which go beyond the 
allegations in the Complaint and thus are beyond the scope of the 
Court's APPA review, do not undermine the amended proposed Final 
Judgment. Moreover, UPMC's request, in connection with the Margin 
Guarantee, to modify the amended proposed Final Judgment to have the 
Court mandate specific contractual practices between Defendants, or to 
have the United States oversee contractual negotiations between them, 
is unnecessary and would involve the Court and the United States 
inappropriately in private contractual negotiations.\22\
---------------------------------------------------------------------------

    \22\ See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 
477, 488 (1977) (``[A]ntitrust laws . . . were enacted for the 
protection of competition not competitors.'') (internal quotation 
marks removed).
---------------------------------------------------------------------------

2. The IT Subsidy
    UPMC also objects to Paragraph V.B of the amended proposed Final 
Judgment, under which Geisinger may provide Evangelical with electronic 
medical records systems and support at a subsidized cost--the IT 
Subsidy.\23\
---------------------------------------------------------------------------

    \23\ Amended proposed Final Judgment ] V.B.
---------------------------------------------------------------------------

    The IT Subsidy will enable Evangelical to adopt health information 
technology to improve the delivery of care to patients in central 
Pennsylvania. Indeed, as UPMC acknowledges, Defendants' sharing of 
electronic medical records software is likely to improve the experience 
for patients who receive care at both Geisinger and Evangelical. Even 
if UPMC is correct that having Geisinger and Evangelical on an 
integrated platform would increase interoperability by making patient 
records easier to access, patient scheduling more fluid, and patient 
referrals easier across the organizations,\24\ those features will 
benefit patients without harming competition. Moreover, it is not 
uncommon in the health care industry for large health care systems to 
offer to subsidize a portion of the costs for smaller health care 
organizations to acquire electronic health records systems.\25\
---------------------------------------------------------------------------

    \24\ UPMC Comment at 15.
    \25\ Office of the Nat'l Coordinator for Health Info. Tech. 
(part of the U.S. Department of Health and Human Services), EHR 
Contracts Untangled: Selecting Wisely, Negotiating Terms, and 
Understanding the Fine Print 6 (2016), https://www.healthit.gov/sites/default/files/EHR_Contracts_Untangled.pdf.
---------------------------------------------------------------------------

    UPMC appears to object to the IT Subsidy because it may increase 
Evangelical's independence and, by virtue of meeting its business 
needs, may make Evangelical less likely to partner with others in the 
market, such as UPMC. This outcome, however, would not harm 
competition.
    Finally, UPMC's attempt to analogize the IT Subsidy to so-called 
``reverse payment'' cases is misplaced, as the IT Subsidy lacks an 
essential component of an agreement to delay competition. In a typical 
``reverse payment'' case, a pharmaceutical company that manufactures a 
brand-name drug settles a claim of patent infringement with a generic 
competitor by agreeing to pay the generic competitor in exchange for 
the generic competitor's agreement to delay launching a competing 
generic drug. Here, by contrast, there is no agreement between 
Defendants to delay or restrain competition. UPMC's comment thus 
provides no reason for concluding that the amended proposed Final 
Judgment is not in the public interest.

V. Conclusion

    After carefully reviewing the public comments, the United States 
continues to believe that the amended proposed Final Judgment provides 
an effective and appropriate remedy for the antitrust violations 
alleged in the Complaint and is therefore in the public interest. The 
United States will move this Court to enter the Final Judgment after 
the comments and this response are published as required by 15 U.S.C. 
16(d).

    Dated: August 31, 2021

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA

/s/David M. Stoltzfus

DAVID M. STOLTZFUS
NATALIE MELADA
CHRIS HONG
DAVID C. KELLY
GARRETT LISKEY

Attorneys for the United States

U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW, 
Suite 4100, Washington, DC 20530, Tel: (202) 598-2978, Email: 
<a href="/cdn-cgi/l/email-protection#8eeaeff8e7eaa0fdfae1e2faf4e8fbfdcefbfdeae1e4a0e9e1f8"><span class="__cf_email__" data-cfemail="e98d889f808dc79a9d86859d938f9c9aa99c9a8d8683c78e869f">[email protected]</span></a>

[REDACTED]

March 8, 2021

U.S. Dept of Justice, 450 Fifth St. NW, Suite 4100, Washington, DC 
20530

Dear Mr. Welsh,

    I am commenting about the settlement between Geisinger and 
Evangelical Hospital I agree with your conclusion that they do not 
merge because of the monopoly the Geisinger will have and all the 
bad effects that will occur.
    I live in Danville, one mile from the Geisinger but have all of 
my care given at Evangelical. I would hate to have that spoiled.

Sincerely,

Carol A. Barsh

Eric Welsh, Chief
Healthcare and Consumer Products Section
Antitrust Division
U.S. Department of Justice
450 Fifth St. NW
Suite 4100
Washington, DC 20530

Mr. Welsh:

    I am writing to express my concerns regarding the DOJ's recent 
proposed settlement for the partial acquisition of Evangelical 
Community Hospital by Geisinger Health.
    As it stands, the settlement limits Geisinger's ownership 
interest in Evangelical to 7.5%, described as passive. Additionally, 
loans/lines of credit to Evangelical are forbidden, as is exerting 
any control over Evangelical's expenditures. Kendra Aucker, 
Evangelical's CEO, has stated that Evangelical will use Geisinger's 
financial support to fund facilities, technology and services while 
simultaneously describing Evangelical Hospital as ``independent''. 
From this, arise the following questions and issues:
    How is Evangelical independent if it depends upon Geisinger's 
7.5% involvement without which we must assume Evangelical could not 
fund upgrades to what Ms. Aucker describes as facilities, technology 
and services?
    What benefit does Geisinger obtain in the arrangement proposed 
by the DOJ since it represents only a fraction of what Geisinger 
sought in both monetary interest and strategic control? It appears 
that had Geisinger walked away from the proposed settlement it would 
have made plain their strategy of assuming sufficient control of a 
competitor without an outright takeover. This strategy was long 
evident to some of us in the community as ``why take over outright 
what you can control by other means''. Hospital competition in the 
area is presently limited due to Geisinger's acquisition of Shamokin 
Area Hospital, Bloomsburg Hospital and the closure of Sunbury 
hospital. With only Evangelical Hospital remaining the strategy 
almost worked. So is it now about Geisinger saving face or is there 
another agenda afoot?
    The proposed settlement is framed in terms of both hospital's 
competition for `inpatient general acute-care hospital services'' 
however there's much revenue to be made from outpatient services. 
What is to prevent Geisinger from expanding services into 
Evangelical's outpatient market thereby negating the cap imposed on 
the inpatient services, thus causing further financial strain on 
Evangelical?
    Evangelical hospital recently completed construction of a $70 
million PRIME (Patient Room Improvement, Modernization, and 
Enhancement) project. With an annual revenue of about $260 million, 
it is reasonable to enquire about the financing and terms that were 
obtained, what was used as collateral and if there was a co-signer. 
The facility was advertised as allowing access to

[[Page 51189]]

leading-edge technology not found at other community hospitals. Was 
this project planned prior to Geisinger's attempted acquisition? Was 
failure the plan? Without Geisinger's hoped for depth of financial 
involvement what will this mean for Evangelical's future finances?
    If Evangelical does not anticipate an adverse financial impact 
from the DOJ's agreement, despite Geisinger's significantly reduced 
financial involvement, why did Evangelical originally accede to 
Geisinger's partnership with such onerous terms unless it was 
needed?
    If Evangelical seeks a revisiting of the DOJ's settlement due to 
future financial shortcomings, does the DOJ currently have an 
opinion on what it may need to propose? In other words, did the DOJ 
review, and if not, will it review why Evangelical was seeking to 
expand services beyond what is found in a community hospital, 
services it apparently could not afford without giving up financial 
and strategic control of its hospital? Structuring an agreement that 
on the surface would not appear to be an antitrust violation gives 
an indication in my mind as to the mindset of the parties.
    Regarding Evangelical's acquisition of IT systems and support 
from Geisinger, will this be at fair market value? Is there a 
mechanism to ensure that the price for support will not make up for 
the denied opportunity of partial hospital ownership and the service 
lines that Geisinger planned to develop?
    In summary, what benefit does Geisinger derive from passive 
involvement in Evangelical, what is the endgame of each 
organization, and at what cost is there to the community, given the 
ever shrinking choices available to the public?

Thank You,

Steve Karp, MD

[REDACTED]

AXINN, Richard B. Dagen
1901 L Street NW
Washington, DC 20036
202.721.5418
<a href="/cdn-cgi/l/email-protection#e0b2a4a1a7a5aea0a1b8a9aeaecea3afad"><span class="__cf_email__" data-cfemail="7f2d3b3e383a313f3e27363131513c3032">[email protected]</span></a>

June 3, 2021

Via Electronic Mail

Eric D. Welsh, Esq.
Chief, Healthcare and Consumer Products Section
Antitrust Division, Department of Justice
450 Fifth Street NW, Suite 4100
Washington, DC 20530

Re: United States v. Evangelical Community Hospital and Geisinger 
Health, Civil Action No. 4:20-cv-01383-MWB (M.D. Pa.)

Dear Mr. Welsh:

    On behalf of our client UPMC, a Pennsylvania nonprofit non-stock 
corporation, we submit these comments suggesting modifications to 
the Proposed Final Judgment (``PFJ'') \1\ in the above- referenced 
case.
---------------------------------------------------------------------------

    \1\ ECF No. 51-1.
---------------------------------------------------------------------------

    UPMC recently entered the general market region involved in this 
case to invigorate competition on both the provider and the insurer 
side. Like Geisinger Health (``Geisinger''), UPMC itself is both a 
provider and payer, or Integrated Delivery and Finance System 
(``IDFS''). And to attempt to increase competition in the very 
region at issue, UPMC engaged in talks with Evangelical Community 
Hospital (``Evangelical'') regarding potential collaboration. The 
combination of these facts puts UPMC in a unique position from which 
to comment on the PFJ.
    After a lengthy investigation, the Department of Justice 
(``DOJ'') properly concluded that the initial proposed Collaboration 
Agreement between Geisinger and Evangelical would ``substantially 
lessen competition and unreasonably restrain trade . . . .'' 
Complaint at 1, United States v. Geisinger Health, No. 4:20-cv-
01383-MWB (M.D. Pa. 2020) (hereinafter ``Compl.'').\2\ From the 
outset, the DOJ correctly alleged that ``the substantial financial 
entanglements between these two close competitors . . . reduces both 
hospitals' incentives to compete aggressively.'' Id. The Complaint 
further explains that Geisinger's motivation to acquire and 
collaborate with Evangelical was to eliminate its central fear--that 
an Evangelical ``strategic partnership'' with UPMC would create a 
``more effective competitor [that] could put Geisinger's revenues at 
risk.'' Id. ] 3.
---------------------------------------------------------------------------

    \2\ ECF No. 1.
---------------------------------------------------------------------------

    Rather than litigate to enjoin the acquisition, on March 3, 
2021, the DOJ and the defendants stipulated to the PFJ.\3\ This 
remedy was aimed at preserving Evangelical's competitive 
independence, and prohibiting Geisinger and Evangelical from sharing 
competitively sensitive information. Indeed, the PFJ was intended to 
require the parties to ``eliminate other entanglements between them 
that would allow Geisinger to influence Evangelical.'' Competitive 
Impact Statement (``CIS''), ECF No. 46 at 2. After the publication 
of the PFJ on March 3, 2021, however, UPMC alerted the DOJ--and the 
DOJ acknowledged--that several problematic provisions contained in 
the original ``Collaboration Agreement'' \4\ between Geisinger and 
Evangelical had not been addressed in the PFJ or Amended and 
Restated Collaboration Agreement (``Amended Collaboration 
Agreement''). ECF No. 45-2; 46-2. These legacy issues--if left in 
place--would harm competition, and they only make sense in the light 
of the original, improper collaboration.
---------------------------------------------------------------------------

    \3\ ECF No. 45-1 (Stipulation and Order to the first proposed 
Final Judgment filed on March 3, 2021, ECF No. 45-2).
    \4\ ECF No. 46-1.
---------------------------------------------------------------------------

    DOJ has since corrected only some of the legacy issues. On May 
17, 2021, it filed a Joint Notice of Amended Proposed Final 
Judgment, attaching a revised PFJ and Second Amended and Restated 
Collaboration Agreement (``Second Amended Collaboration 
Agreement''). See ECF No. 51, 51-1, 51-3. According to the Joint 
Notice, ``[a]fter filing the proposed Final Judgment, it was 
discovered that the Amended and Restated Collaboration Agreement and 
its attachments inadvertently included legacy provisions that did 
not conform to the proposed Final Judgment.'' ECF No. 51. Still, 
despite these corrections, additional legacy issues that harm 
competition remain unaddressed.
    Two critical legacy issues create anticompetitive financial 
entanglements that undermine the objective to preserve and protect 
competition in the relevant market. These two principal 
entanglements involve: (1) Geisinger's margin guarantees to 
Evangelical, found in the Addendum to Geisinger's Hospital Services 
Agreement with Evangelical and the Addendum to the Physician 
Services agreement, both included as Exhibit D to the Second Amended 
Collaboration Agreement (ECF No. 51-3 at 55-56, 60-61) (``Margin 
Guarantee''); \5\ and (2) Geisinger's subsidization of Evangelical's 
information technology (``IT'') expenses, as well as Geisinger's 
ongoing entanglement in those IT services, both referenced in the 
PFJ at V.B.1-3 (ECF No. 51-1 at 7) and 6.5 of the Second Amended 
Collaboration Agreement (ECF No. 51-3 at 9) (``IT Entanglement''). 
These entanglements also involve substantial improper information 
sharing not resolved by the PFJ.
---------------------------------------------------------------------------

    \5\ The Margin Guarantee was also included in Exhibit D to the 
Amended Collaboration Agreement. ECF No. 46-2 at 54, 60-61.
---------------------------------------------------------------------------

    Whether viewed independently or together, these provisions 
enable Geisinger and Evangelical to achieve precisely those 
anticompetitive effects of the transaction that the DOJ strongly 
urged should be eliminated. Permitting these legacy provisions to 
survive will reduce the incentives of Geisinger and Evangelical to 
compete. See Compl. ] 6. In fact, in addition to the reduction in 
competition from a stand-alone Evangelical, these surviving 
entanglements will reduce the threat to Geisinger that Evangelical 
will become a stronger competitor through collaboration with UPMC 
(or another entity). See id. ] 3. As the Complaint and Competitive 
Impact Statement make plain, those two anticompetitive goals 
motivated the original Collaboration Agreement, and that purpose is 
still accomplished through the Margin Guarantee and the IT 
Entanglement.
    The key to unraveling the purpose and effect of these provisions 
is to ``follow the money.'' Here, as in reverse payment cases where 
a branded pharmaceutical pays a generic to eliminate a competitive 
threat to its market position, the flow of money from Geisinger to 
Evangelical under the Margin Guarantee and IT Entanglement is most 
consistent with anticompetitive intent and effects. For example, 
under the PFJ, Geisinger is permitted to provide heavy subsidies on 
IT-- discounts of 85%, presumably worth tens of millions of 
dollars--to its ``closest competitor.'' Compl. ] 18. Further, 
contrary to the expected outcome between a payer and a provider, 
Geisinger's Margin Guarantee can lead to Geisinger paying more when 
it sends additional volume to Evangelical. See ECF No. 51-3 at 59, 
64. Finally, under the terms of PFJ, Evangelical gets to keep 
approximately $20.3 million from Geisinger, while Geisinger obtains 
a 7.5% interest in a non-profit that will entitle it to that 7.5% 
value only upon sale of Evangelical, liquidation, or termination of 
the agreement. See CIS at 10-11; ECF No. 51-3 at 10-11.

[[Page 51190]]

    Why would Geisinger bestow such largess on its closest 
competitor? After all, Geisinger--which despite its position in the 
relevant market refuses to enter provider contracts with any of 
UPMC's health plans--knows how to compete. The DOJ has already 
properly rejected any suggestion that Geisinger was offering funds 
``altruistically.'' Compl. ] 6. Instead, Geisinger is providing and 
guaranteeing this money, and Evangelical is accepting it, because 
``as a result of this transaction, both Defendants have the 
incentive to pull their competitive punches--incentives that would 
not exist in the absence of the agreement.'' Compl. ] 32. Geisinger 
achieves a dependent Evangelical, and perhaps more importantly, 
keeps UPMC at bay. Indeed, if permitted, the entanglement created by 
the remaining provisions could allow Geisinger to influence 
Evangelical to cut off its relationship with UPMC as well, further 
threatening competition for health plans in the market.
    This outcome should not be permitted, particularly where the DOJ 
has already acknowledged there are no procompetitive benefits in the 
transaction to weigh against these harms,\6\ and ``Evangelical's 
placement in the most favored tier of Geisinger Health Plan's 
commercial insurance products does not require the partial-
acquisition agreement.'' Compl. ] 66. These legacy provisions, like 
those the DOJ has excised, were designed to further the 
anticompetitive ``spirit and intent of the ECH-Geisinger 
Collaboration Agreement.'' ECF No. 46-2 at 54, 60. Because there is 
no pro-competitive collaboration which outweighs the likely 
anticompetitive effects, the PFJ should be modified to eliminate 
these last impactful vestiges of the original Collaboration 
Agreement.
---------------------------------------------------------------------------

    \6\ Compl. ] 67 (``there are no transaction-specific 
efficiencies to weigh against the harm'').
---------------------------------------------------------------------------

Background

    Evangelical and Geisinger are each other's closest competitors 
in a six-county area of Central Pennsylvania. Compl. ]] 18, 56, 65; 
CIS at 4-5. Together they account for at least 70% of the inpatient 
general acute-care services in this area. CIS at 4. As an 
independent community hospital with annual revenue of approximately 
$260 million, Evangelical knew it was vulnerable to competition from 
Geisinger, the largest provider in the relevant market, with annual 
revenue above $7 billion. See Compl. ]] 19, 21; CIS at 2-3. 
Meanwhile, Geisinger ``had long feared that Evangelical could 
partner with a hospital system or insurer to compete even more 
intensely'' against Geisinger. Compl. ] 3.
    Geisinger's concern was heightened in 2017 when Evangelical 
announced it was looking for a strategic partner. Compl. ] 22. This 
occurred just after Susquehanna Health System joined UPMC in 2016, 
having rejected overtures from Geisinger. To avoid a potential 
repeat whereby a nearby competitor became stronger, Geisinger 
intended to create ``an indefinite partnership'' to ensure that 
``Evangelical is 'tied to us' so `they don't go to a competitor.' '' 
Compl. ] 30. The stage was set for a merger or collaboration that 
would solve both Geisinger's and Evangelical's troubles. And since 
the defendants knew they could not merge outright, they ``concocted 
the complicated partial-acquisition agreement . . . to avoid 
antitrust scrutiny.'' Compl. ] 24.
    Even now after several revisions (both pre- and post-challenge), 
the Second Amended Collaboration Agreement still maintains certain 
anticompetitive features that generate the same financial and other 
entanglements condemned in the DOJ's Complaint. These provisions 
negatively impact the incentives for Geisinger and Evangelical to 
compete with one another, incentivize higher prices to payers, and 
substantially reduce the likelihood that Evangelical would partner 
with UPMC or any other entity in a way that could better compete 
against Geisinger. Indeed, Paragraph 6 of the Complaint aptly 
summarizes the results:

    The $100 million pledge, however, was not made altruistically 
and is certainly not without strings. The partial-acquisition 
agreement ties Geisinger and Evangelical together in a number of 
ways, fundamentally altering their relationship as competitors and 
curtailing their incentives to compete independently for patients. 
Patients and other purchasers of healthcare in central Pennsylvania 
likely will be harmed as a result of this diminished competition.

    The relief already obtained by the DOJ disentangles the parties 
in some important ways, such as severing Geisinger's ability to 
appoint directors and control certain Evangelical actions. The DOJ 
also capped Geisinger's ownership interest in Evangelical to attempt 
to preserve each company's respective incentives to compete.
    Unfortunately, the surviving entanglements between Geisinger and 
Evangelical--now ostensibly blessed by the PFJ--effectively negate 
to a substantial degree the potential positive effects of the 
proposed relief. The Margin Guarantee and IT Entanglement were 
negotiated in connection with, and are inextricably linked to, the 
original Collaboration Agreement. So too was the payment of $20 
million. There is no reason to pick and choose between the various 
provisions as to which can survive. Given the existence of a hold-
separate agreement in this case, voiding the Second Amended 
Collaboration Agreement in its entirety is the best option to 
achieve the relief described in the Complaint and claimed in the 
Competitive Impact Statement. Short of total elimination, at a 
minimum, the provisions discussed herein should be voided. In the 
event that the first two options are rejected, some additional 
alternatives are presented that might lessen the magnitude of the 
harm.
    We explain in more detail below why the legacy provisions 
regarding the Margin Guarantee and IT Entanglement maintain the 
competitive harms identified in the Complaint and why the PFJ should 
be modified to promote the public interest. The PJF simply does not 
fall ``within the range of acceptability or `within the reaches of 
the public interest.' '' \7\
---------------------------------------------------------------------------

    \7\ United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 
(D.D.C. 1982) (citations and subsequent history omitted).
---------------------------------------------------------------------------

Legal Standard in Tunney Act Proceedings

    The DOJ will file comments and its response with the Court in 
compliance with the Tunney Act, which states, the Court ``shall 
determine that the entry of [the PFJ] is in the public interest.'' 
\8\ ``[C]ourts compare the complaint filed by the government with 
the proposed consent decree and determine whether the remedies 
negotiated between the parties and proposed by the Justice 
Department clearly and effectively address the anticompetitive harms 
initially identified.'' \9\ Proposed remedies should ``effectively 
open[] the relevant markets to competition . . . . '' \10\ Although 
courts owe deference to the DOJ, the exercise is not ``a mere 
formality'' \11\ nor ``merely a `judicial rubber stamp.' '' \12\ In 
this regard, when making its public interest determination, a court 
must ``make an independent determination.'' \13\ As the D.C. Circuit 
has explained, ``If, for example, a proposed consent `decree is 
ambiguous, or the district judge can foresee difficulties in 
implementation,' the decree should not be entered until the problems 
are fixed.'' \14\ Further, courts are not obliged to accept a 
consent ``if third parties contend they would be positively injured 
by the decree.'' \15\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 16(b), (d), (e)(1).
    \9\ United States v. Thomson Corp., 949 F. Supp. 907, 913 
(D.D.C. 1996). None of the relief proposed here exceeds the scope of 
the Complaint allegations. Cf. United States v. Microsoft Corp., 56 
F.3d 1448, 1462 (D.C. Cir. 1995).
    \10\ AT&T, 552 F. Supp. at 153.
    \11\ United States v. CVS Health Corp., 407 F. Supp. 3d 45, 52 
(D.D.C. 2019).
    \12\ Thomson Corp., 949 F. Supp. at 914.
    \13\ Id. (internal quotations and citations removed). Here, the 
court declined to approve the Proposed Final Judgment until it 
included a provision that would require the defendants to provide 
anyone a free license to a copyright upon request or another 
suitable remedy to resolve the court's concerns about barriers to 
entry. Id. at 930-31.
    \14\ CVS Health, 407 F. Supp. 3d at 52 (citing Microsoft, 56 
F.3d at 1462).
    \15\ Microsoft, 56 F.3d at 1462.
---------------------------------------------------------------------------

    When, after reviewing the DOJ's response that nothing in the 
public comments alters the DOJ's original conclusions, a court 
disagrees and concludes that a Proposed Final Judgment does not meet 
the public interest standard, courts have taken a variety of steps. 
Those have included requiring the parties to substantially modify 
the proposed consent decree before approving it,\16\ ordering that 
the parties file annual reports with the court regarding the status 
of certain requirements in the Final Judgment,\17\ and holding 
annual hearings ``to ensure that the Final Judgment does, and 
continues to, satisfy the public interest.'' \18\ As in another

[[Page 51191]]

recent matter involving the health care industry, ``with so much at 
stake, the congressionally mandated public interest inquiry must be 
thorough.'' \19\
---------------------------------------------------------------------------

    \16\ AT&T, 552 F. Supp. at 214; Thomson, 949 F. Supp. at 931.
    \17\ United States v. Comcast Corp., 808 F. Supp. 2d 145, 149-
150 (D.D.C. 2011). The court indicated that ``despite the 
Government's assurances that 'this Court retains jurisdiction to 
issue orders and directions necessary and appropriate to carry out 
or construe any provision of the Final Judgment,' and `to enforce 
compliance, and to punish violations of its provisions,' I am not 
completely certain that these safeguards, alone, will sufficiently 
protect the public interest in the years ahead.'' Id. at 149 
(citations omitted).
    \18\ Comcast Corp., 808 F. Supp. 2d at 150.
    \19\ CVS Health, 407 F. Supp. 3d at 48.
---------------------------------------------------------------------------

Margin Guarantees in the Collaboration Agreement Addenda

    Exhibit D to the Second Amended Collaboration Agreement \20\ 
incorporates Margin Guarantee provisions that create incentives for 
Geisinger and Evangelical not to compete. As detailed more fully 
below, under the Margin Guarantee, Geisinger ensures that 
Evangelical obtains equal or larger Geisinger Health Plan revenues 
throughout the term of the agreement. In addition to reducing head-
to-head competition, this Margin Guarantee creates incentives for 
Evangelical to raise provider rates to UPMC and other health plans, 
increasing costs to consumers and heavily favoring Geisinger in the 
relevant market. These Addenda were part of the original 
Collaboration Agreement,\21\ and their practical effects are only 
understood in that context. With no pro- competitive collaboration 
or integration to offset the likely anticompetitive effects, these 
Addenda should be stricken along with the other disincentives to 
compete still embedded in the Second Amended Collaboration 
Agreement.
---------------------------------------------------------------------------

    \20\ See Addendum to the Agreement to Provide Hospital Services 
by and among Geisinger Health Plan, Geisinger Indemnity Insurance 
Company, Geisinger Quality Options, Inc., and Evangelical Community 
Hospital, ECF No. 51-3 at 55; Addendum to the Agreement to Provide 
Primary and Specialty Medical Services by and among Geisinger Health 
Plan, Geisinger Indemnity Insurance Company, Geisinger Quality 
Options, Inc., and Evangelical Medical Service Organization, ECF No. 
51-3 at 60.
    \21\ See ECF No. 46-1 at 129-140.
---------------------------------------------------------------------------

    Although the CIS does not mention the Margin Guarantee, the DOJ 
apparently views the Margin Guarantee as a ``typical'' contract 
between a payer and a provider with a guarantee that Evangelical 
will achieve guaranteed revenue in exchange for lower rates. But 
this view ignores the reality reflected throughout the Complaint 
that Geisinger is not a typical payer, but is vertically integrated, 
providing both health care services and health plans.
    Given the uncertain nature of healthcare costs, a typical payer-
provider contract does not contain 10-plus-year margin guarantees. 
UPMC is both a provider and an insurer, and is not aware of the 
existence of any agreement with a similar Margin Guarantee in any 
other context. The concept is rife with anticompetitive potential 
and several such effects are likely to unnecessarily eviscerate a 
substantial portion of the relief sought in the PFJ.
    The Addenda consist of two main parts. First, Geisinger commits 
that Evangelical's hospital and other provider services will be 
included in the highest tier (Tier 1) of Geisinger's health 
plans.\22\ This provision is not generally problematic; a health 
plan often attempts to steer increased patient traffic to a provider 
in exchange for lower reimbursement rates.
---------------------------------------------------------------------------

    \22\ See ECF No. 51-3, at 56 (Sec.  B.2), at 61 (Sec.  B.2).
---------------------------------------------------------------------------

    Second, however, the Addenda contains an unusual and plainly 
anticompetitive Margin Guarantee,\23\ that (while somewhat difficult 
to parse and perhaps intentionally vague as to details) appears to 
provide for the following:
---------------------------------------------------------------------------

    \23\ See ECF No. 51-3, at 55-56 (Sec.  B.1), at 60-61 (Sec.  
B.1).
---------------------------------------------------------------------------

    <bullet> In each year of the ten-year agreement, Geisinger 
guarantees that Evangelical will receive the same or a larger amount 
of total margin dollars (called a ``Margin Threshold'') starting 
from a certain base.\24\
---------------------------------------------------------------------------

    \24\ See ECF No. 51-3, at 55-56 (Sec. Sec.  A, B.1), at 60-61 
(Sec. Sec.  A, B.1).
---------------------------------------------------------------------------

    <bullet> If the margin dollars decrease, Geisinger will make it 
up to Evangelical with (i) a retroactive payment; and (ii) higher 
reimbursement rates to Evangelical going forward.\25\
---------------------------------------------------------------------------

    \25\ See ECF No. 51-3, at 55-57 (Sec. Sec.  B.1, B.3, B.6, B.7); 
id. at 59 (Exhibit A); at 60-63 (Sec. Sec.  B.1, B.3, B.6, B.7); id. 
at 64 (Exhibit A).
---------------------------------------------------------------------------

    <bullet> If the margin dollars increase, Evangelical pays 
Geisinger a retroactive payment and Geisinger's rates go down.\26\
---------------------------------------------------------------------------

    \26\ See ECF No. 51-3, at 55-57 (Sec. Sec.  B.1, B.3, B.6, B.7); 
id. at 59 (Exhibit A); at 60-62 (Sec. Sec.  B.1, B.3, B.6, B.7); id. 
at 64 (Exhibit A).
---------------------------------------------------------------------------

    <bullet> Geisinger and Evangelical share highly competitively 
sensitive information to effectuate the agreement on a monthly basis 
(discussed further below).\27\
---------------------------------------------------------------------------

    \27\ See ECF No. 51-3, at 56-57 (Sec. Sec.  B.6, B.7), at 61-62 
(Sec. Sec.  B.6, B.7).
---------------------------------------------------------------------------

    Illustrations of how this framework is to operate in practice 
are attached to the Addenda as Exhibit A, and they produce highly 
surprising and competitively suspect results.\28\
---------------------------------------------------------------------------

    \28\ See ECF No. 51-3, at 59 (Exhibit A), at 64 (Exhibit A).
---------------------------------------------------------------------------

    First, recall that Evangelical feared competition from 
Geisinger. Absent this Margin Guarantee for the next ten years, 
Geisinger would have tried to steer patients away from Evangelical 
providers and toward Geisinger providers. But Geisinger's Margin 
Guarantee has reduced Evangelical's fear of losing patients by 
setting up a penalty to discourage Geisinger from engaging in such 
activity. With the Margin Guarantee, Evangelical is immunized 
against loss of margin. And if Geisinger is to entice a patient to a 
Geisinger hospital, Geisinger not only has to offer better terms to 
the patient, but also has to make up revenue lost by Evangelical. By 
design, the incentive to compete between Geisinger and Evangelical 
has decreased, the very same effect that the DOJ decried in the 
Complaint regarding the Collaboration Agreement.
    Why would Geisinger offer to make payments to compensate 
Evangelical for patients it lures away? \29\ Because the penalty 
benefits Geisinger; Evangelical no longer fears competition from 
Geisinger, and therefore Geisinger has less reason to fear that 
Evangelical would partner with UPMC (or another entity) and become 
``a more effective competitor.'' Simply put, the Margin Guarantee 
achieves Geisinger's main objective from the collaboration: 
``[d]efensive positioning against expansion by [UPMC] and/or 
affiliation with [another] competitor.'' Compl. ] 22 (brackets in 
original).
---------------------------------------------------------------------------

    \29\ The 7.5% interest retained by Geisinger does not entitle it 
to receive any cash flow. ECF 51-3, at 8 (Sec.  6.2) (``Evangelical 
shall not make, nor be required to make, any distributions or other 
payments with respect to Geisinger's membership interest in 
Evangelical.'').
---------------------------------------------------------------------------

    Also by design, this reduction of competition from Geisinger 
gives Evangelical the freedom and incentive to raise provider rates 
to other payers (like UPMC), which have much smaller subscriber 
bases and direct lower patient volume to Evangelical than can 
Geisinger. As Evangelical raises rates for medical services, 
Geisinger providers are then also in a position to raise rates. 
Indeed, economic theory predicts that no actual payments even have 
to trade hands for market rates to be successfully increased. This 
is a classic example of game theory involving an enforceable pre-
commitment.\30\
---------------------------------------------------------------------------

    \30\ Cf. Jonathan Baker, Two Sherman Act Section 1 Dilemmas: 
Parallel Pricing, the Oligopoly Problem, and Contemporary Economic 
Theory, 38 ANTITRUST BULLETIN 143, 158 (``Firms can deter rivals 
from cheating by guaranteeing that when the time comes to carry 
through a punishment, they will find the punishment behavior 
attractive. They do so by tying their own hands . . . .''); Ian 
Ayres, How Cartels Punish: A Structural Theory of Self- Enforcing 
Collusion, 87 COLUMBIA L. REV. 295, 317 (1987) (``Once a super-
competitive cartel price is established, an MFN [most-favored-
nation] clause also acts to increase the costs of prices cuts. 
Unlike an MCC [meeting competition clause], where the rivals are 
committed to punishing, the MFN clause is a credible commitment to 
self-punishment '').
---------------------------------------------------------------------------

    The Exhibit A to the Addenda also reveal a second mechanism 
incenting Evangelical to raise payer rates. If Geisinger Health Plan 
competes for and captures an existing Evangelical patient from 
another insurer that pays Evangelical higher reimbursement rates 
than does Geisinger, then Geisinger must make up the revenue loss to 
Evangelical. In effect, this could result in Geisinger paying higher 
rates to Evangelical even when Geisinger's volume to Evangelical 
increases. Several crucial implications fall out from this odd 
result.
    It is axiomatic that higher payer patient volumes predictably 
lead to lower reimbursement rates. Geisinger has by far the largest 
insurance market share in the relevant area. Therefore, one would 
expect that most payers, if not all, are like the insurer referred 
to in Exhibit A as ``Payer A,'' paying higher provider rates than 
Geisinger to Evangelical. In this example, when Geisinger's Health 
Plan takes a current Evangelical patient from ``Payer A''--which 
pays Evangelical higher rates than would Geisinger for the same 
medical services--Geisinger has promised to reimburse Evangelical 
for lost margin through a retroactive payment and higher rates going 
forward. And the greater the difference in rates, the more money 
Geisinger has promised to pay to make Evangelical whole.
    Why does it follow that Evangelical has the incentive to raise 
rates to UPMC or another similarly-situated Payer A? First of all, 
that's what Geisinger wants--and it is willing to pay Evangelical to 
get it. Moreover, Evangelical will raise rates because it can 
profitably do so. As Evangelical increases provider rates to UPMC 
two possibilities can

[[Page 51192]]

occur: In one scenario, UPMC accepts those rate increases and pays 
more, passing those additional costs on to its insured employers and 
employees. This in turn increases the cost of UPMC's health plans, 
making UPMC less competitive against Geisinger's plans. If UPMC is 
able to retain its employer clients in the face of the price 
increase, Evangelical's price increase is successful, and it gets 
more revenue. Alternatively, if UPMC's employer clients refuse the 
price increase, the most likely insurer alternative is Geisinger. 
Geisinger, as discussed above, would then have to pay Evangelical to 
make up for any lost margin, but it gains new subscribers that 
offset the payment to Evangelical. In short, Evangelical is 
protected against any loss of profit from raising rates to UPMC or 
another ``Payer A,'' and will gain revenue under many likely 
circumstances.\31\
---------------------------------------------------------------------------

    \31\ In the ``but for'' world without the Margin Guarantee, 
assuming that Evangelical raises rates to UPMC and UPMC loses 
employers to Geisinger, if Geisinger's reimbursement rates are 
lower, Evangelical would lose revenue. With the Margin Guarantee, 
Evangelical no longer has to consider that potential revenue loss 
from the rate increase to UPMC or another similarly situated payer.
---------------------------------------------------------------------------

    The illustration above raises another particularly unusual 
question that should give an antitrust enforcer pause: As Geisinger 
Health Plan wins new patients and its volume increases at 
Evangelical, why would Geisinger commit to paying a higher rate to 
Evangelical? In light of the motivation for the Collaboration 
Agreement as a whole, the best answer is to think of the Margin 
Guarantee as Geisinger paying Evangelical to raise rates to UPMC. 
That benefits Geisinger because employers that are not willing to 
accept the price increase will simply switch to Geisinger. 
Additionally, on the provider side, if patients leave Evangelical as 
a result of the higher prices, Geisinger's providers are again the 
most likely alternative: Geisinger has more than 50% of the relevant 
market, and we understand that the diversion ratio from Evangelical 
to Geisinger is around 70%. In short, the Margin Guarantee is a new 
method to ``raise rivals' costs,'' and gain additional market share, 
whether it occurs on the provider or payer side.\32\
---------------------------------------------------------------------------

    \32\ See PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW: 
AN ANALYSIS OF ANTITRUST PRINCIPLES AND
    THEIR APPLICATION ] 651b5 (4th and 5th ed. 2013-20) (``Several 
anticompetitive actions by dominant firms are best explained as 
efforts to limit rivals' market access by increasing their costs. 
Such strategies may succeed where more aggressive ones involving the 
complete destruction of rivals might not. Once rivals' costs have 
been increased, the dominant firm can raise its own price or 
increase its market share at the rivals' expense.''); Thomas G. 
Krattenmaker & Steven C. Salop, Anticompetitive Exclusion: Raising 
Rivals' Costs to Achieve Power over Price, 96 YALE L.J. 209 (1986).
---------------------------------------------------------------------------

    We understand the DOJ's belief is that instead of increasing 
provider rates to UPMC and other payers, Evangelical will be 
incentivized to lower rates to other health plans with the 
expectation that these smaller payers will win Geisinger-insured 
patients and still preserve its margin from Geisinger under the 
Margin Guarantee. But this is unlikely for several reasons. The 
Addenda is supposed to further the collaboration between the two, to 
the benefit of both parties. If Evangelical opportunistically 
reduced rates to other payers to take advantage of the Margin 
Guarantee, Geisinger would likely have a claim for breach of 
contract because of the implied covenant of good faith and fair 
dealing. The Second Amended Collaboration Agreement allows Geisinger 
to provide approximately $20 million to Evangelical in exchange for 
a 7.5% ownership interest. If Evangelical substantially lowered 
rates to other providers, that would not be in the spirit of 
contract.\33\
---------------------------------------------------------------------------

    \33\ See Alpha Upsilon Chapter of Fraternity of Beta Theta Pi, 
Inc. v. Pennsylvania State Univ., No. 4:19-cv-01061, 2019 WL 
5892764, at *10-11 (M.D. Pa. Nov. 12, 2019) (denying motion to 
dismiss claim for breach of the implied covenant of good faith and 
fair dealing); Somers v. Somers, 613 A.2d 1211, 1213 (Pa. Super. 
1992) (``certain strains of bad faith which include: ``e''vasion of 
the spirit of the bargain'').
---------------------------------------------------------------------------

    Additionally, because of the payment mechanism and the 
information sharing in the Margin Guarantee, there is no doubt that 
Geisinger would learn of any discounting to UPMC or others. As a 
result, Evangelical would be further dissuaded from lowering prices 
to UPMC in fear that Geisinger might retaliate, for example, through 
additional capital expenditures in Evangelical's backyard. Compl. ] 
19 (``in considering capital expenditures for certain improvements 
to its facilities in 2018, Geisinger cited Evangelical's competitive 
activities.''). Further, a rate decrease to UPMC (or other payers) 
would have the almost certain effect of reducing revenue for all 
current volume, balanced against an uncertain hope that UPMC (or 
other payers) would send additional volume to Evangelical. Lower 
rates then would require the unlikely belief by Evangelical that the 
uncertain incremental revenue would surpass the predictable loss 
from revenue of current patients. For all the above reasons, 
incentives point towards Evangelical raising provider reimbursement 
rates to non-Geisinger payers.
    It bears repeating that the Margin Guarantee was created to 
better align incentives in furtherance of a joint profit maximizing 
collaboration. Moreover, any thoughts that past competition would 
predict future competition between Evangelical and Geisinger is 
dispelled by the DOJ's compelling recitation of ``the history of 
picking and choosing when to compete with each other.'' See Compl. 
]] 40-42. In fact, the DOJ found:
    <bullet> Although Geisinger and Evangelical are competitors for 
patients in central Pennsylvania, they have previously engaged in 
coordinated behavior, picking and choosing when to compete and when 
not to compete. This tendency to coordinate their competitive 
behavior is reflected by Evangelical's CEO's view of ``co-opetition.
    <bullet> Defendants' prior acts of coordination, which are 
beneficial only to themselves, reinforce their dominant position for 
inpatient general acute- care services in central Pennsylvania. 
Defendants' coordination comes at the expense of greater competition 
and has taken various forms:
    [cir] Leaders from Defendants have had ``regular touch base 
meetings,'' in which they discussed a variety of topics, including 
strategic growth options.
    [cir] Geisinger has shared with Evangelical the terms of its 
loan forgiveness agreement, which Geisinger uses as an important 
tool to recruit physicians.
    [cir] 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.
    <bullet> More concerning, senior executives of Defendants 
entered into an agreement not to recruit each other's employees--a 
so-called no-poach agreement. Defendants' no-poach agreement--an 
agreement between competitors, reached through verbal exchanges and 
confirmed by email from senior executives-- reduces competition 
between them to hire hospital personnel and therefore directly harms 
healthcare workers seeking competitive pay and working conditions. 
Defendants have monitored each other's compliance with this unlawful 
agreement, and deviations have been called out in an effort to 
enforce compliance. . . .
    The DOJ's conclusion to this section is particularly relevant 
here:

    This history of coordination between Defendants increases the 
risk that the additional entanglements created by the partial-
acquisition agreement will lead Geisinger and Evangelical to 
coordinate even more closely at the expense of consumers when it is 
beneficial for them to do so. Moreover, this history makes clear 
that Defendants' self-serving representations about their intent to 
continue to compete going forward--despite all of the entanglements 
created by the partial- acquisition agreement--cannot be trusted.

Compl. ] 43 (emphasis added).
    Even without this history, the entanglements raise unjustifiable 
antitrust risks. With this history, the result is even more certain. 
These entities are not entitled to the benefit of the doubt at the 
expense of consumers.
    Finally, the Margin Guarantee has nothing to do with, and is 
severable from, the tiering provision in the Addendum. As Paragraph 
66 of the Complaint recognizes:

    Evangelical's placement in the most favored tier of Geisinger 
Health Plan's commercial insurance products does not require the 
partial-acquisition agreement. To the contrary, agreements between 
hospitals and insurers that offer favorable placement in commercial 
insurance products in exchange for favorable rates are common and do 
not require the entanglements created by the partial-acquisition 
agreement.

This logic also applies to the Margin Guarantee. This entanglement 
is not necessary to effectuate tiering. The Margin Guarantee was 
part and parcel of the original, anticompetitive Collaboration 
Agreement, designed to foster collaboration, not competition. 
Recall, the parties' preferred outcome was a complete merger. Compl.

[[Page 51193]]

] 23. The Margin Guarantee, like all the other provisions, was 
drafted (i.e., ``concocted'') to replicate that goal as much as 
feasible.
    Evangelical and Geisinger should not be permitted to maintain 
``additional entanglements created by the partial acquisition 
agreement.''

It Subsidy and Entanglement by Horizontal Competitor

    Another key anticompetitive legacy issue from the original 
Collaboration Agreement remains: Geisinger's extraordinary subsidy 
of and entanglement in its main competitor's IT systems. The IT 
Entanglement was part of the original Collaboration Agreement 
because Geisinger and Evangelical expected to cease (or at least 
substantially reduce) mutual competition. The CIS summarily 
concludes that ``the provision of upgraded health records software 
and other support software is unlikely to prevent Evangelical from 
collaborating with other healthcare providers.'' CIS at 16. But the 
DOJ does not have ``a crystal ball to forecast'' how this IT 
Entanglement will work, and lacks experience with this unique 
situation.\34\ For the reasons below, the DOJ conjecture is likely 
incorrect. As a result, the IT Entanglement should also be 
reconsidered and eliminated.
---------------------------------------------------------------------------

    \34\ Cf. Comcast Corp., 808 F. Supp. 2d at 149; CVS Health, 407 
F. Supp. 3d at 50-51 (rejecting DOJ conclusion that foreclosure ``is 
unlikely to occur,'' because absent supporting evidence and 
explanation, the response is ``little more than a bald assertion 
that it is right and the AMA is wrong'').
---------------------------------------------------------------------------

    The Complaint recognizes that Evangelical had the financial 
ability to improve its IT without this collaboration.\35\ And, as 
the DOJ has pointed out, Geisinger's outlays to Evangelical are not 
for altruistic purposes. See Compl. ] 6. If not for altruism, then 
why would Geisinger assist its main competitor to become even 
marginally more competitive? The answer, once again, is that 
Geisinger has its eye on the prize--ensuring its dominant 
competitive position in the market by reducing Evangelical's 
independence and the likelihood that Evangelical would collaborate 
with another entity to become a significantly more effective 
competitor. UPMC is well aware that independent community hospitals 
cherish their independence, and collaborate only when necessary. By 
effectively taking Evangelical's IT expenses off the table, 
Geisinger achieves its objective. Furthermore, Geisinger is not just 
subsidizing IT; rather, Geisinger is entangling itself within the 
Evangelical IT system.\36\ This entanglement will give Geisinger, 
the dominant provider and payer in the market, a further advantage 
over any other competition, of which there already is very 
little.\37\
---------------------------------------------------------------------------

    \35\ Compl. ]] 64-65.
    \36\ There are two means by which a ``donor'' under the Stark 
Act might provide IT subsidies. The first involves the donee dealing 
directly with the EMR. The other puts the donor between the EMR and 
the donee, which involves more entanglement. The Agreement here 
seems to contemplate the latter.
    \37\ The Complaint alleges that UPMC has approximately 27% of 
the relevant market. But this substantially overstates UPMC's 
position. The DOJ's estimated share is an artifact of the reality 
that Evangelical's service area stretches as far north as 
Williamsport, home of a major UPMC hospital. This artificially 
boosts the apparent competitive significance of UPMC. In fact, there 
are very few zip codes where any material overlap between UPMC and 
Evangelical exists. Geisinger and Evangelical are the only two 
significant competitors in the vast majority of Evangelical's 
service area.
---------------------------------------------------------------------------

    As before, the IT Entanglement should be examined, not in a 
vacuum, but informed by the anticompetitive purpose of the original 
Collaboration Agreement. And the big picture is clear. Prior to the 
deal, Evangelical was in a ``strong financial position, had been 
profitable for the last five years,'' and had the financial ability 
to fund capital improvement projects. Compl. ] 65. Meanwhile, 
Evangelical was considering a partnership with UPMC or others. The 
Complaint alleges that Geisinger was aware of that threat, and 
wanted to prevent it. This motive leads to the following 
alternative, yet realistic, view of the but for world:
    <bullet> Geisinger believed that Evangelical was considering 
partnering with UPMC. Compl. ] 22. Geisinger knew that such a 
partnership would increase competition and be unfavorable for 
Geisinger's dominant position. Compl. ] 3. Geisinger believed that 
it needed to prevent a UPMC-Evangelical collaboration. Compl. ] 30.
    <bullet> Geisinger would have preferred a full acquisition of 
Evangelical, but also soon realized that such a transaction would be 
blocked on antitrust grounds. Compl. ] 23.
    <bullet> As a fallback, Geisinger and Evangelical sought to 
``concoct'' a partial acquisition, Compl.] 24, but that arrangement 
too might be blocked.
    <bullet> As a further attempt to prevent a relationship between 
UPMC and Evangelical, Geisinger decided to offer an arrangement 
whereby Evangelical remains technically independent, but will become 
entangled and collaborate closely with Geisinger.
    <bullet> Geisinger offers to pay the vast majority of 
Evangelical's significant IT expenses, requiring Evangelical's 
dependence on Geisinger for technology licenses and operational 
support, as well as significant information sharing over the course 
of a decade.
    This is essentially the state of the world. Geisinger should 
have no incentive to assist its main adversary. So why do it? To 
reduce the risk of Evangelical partnering with UPMC or another 
entity that might pose an increased competitive threat to Geisinger. 
Prior to the negotiations over the original Collaboration Agreement, 
the parties were negotiating an IT license. The value of the IT 
license to Geisinger was estimated at $10 million alone; \38\ thus, 
the Second Amended Collaboration Agreement will reduce that revenue 
to only $1.5 million, a windfall of $8.5 million for Evangelical (in 
addition to the $20.3 million). It is unlikely that this IT 
Entanglement represents an arms-length transaction between 
competitors; Geisinger expects Evangelical to hold up its end of the 
deal, and these provisions provide assurances that this will occur.
---------------------------------------------------------------------------

    \38\ Compl. ] 29.
---------------------------------------------------------------------------

    This is another anticompetitive ``win-win'' for Geisinger and 
Evangelical, which nominally maintains Evangelical's independence 
while becoming dependent on Geisinger's largesse, thereby reducing 
its threat to Geisinger's dominance. But it is a significant loss 
for health care consumers in the region, who might have benefitted 
from more vigorous competition to Geisinger's stronghold on both 
medical services and insurance in the relevant market.
    With respect to the likely anticompetitive effects, the most 
appropriate analogy to the substantial IT discounts provided by 
Geisinger to Evangelical involves the branded-generic pharmaceutical 
reverse payment cases.\39\ As the courts now recognize, the large 
and unjustified flow of anything of value from a dominant firm to a 
competitor in the wrong direction is suspect. See King Drug Co. of 
Florence, Inc. v. SmithKline Beecham Corp., 791 F.3d 388, 404 (3d 
Cir. 2015) (stating ``reverse payments are problematic because of 
their potential to negatively impact consumer welfare by preventing 
the risk of competition'' and recognizing that certain non-cash 
transfers ``are likely to present the same types of problems as 
reverse payments of cash.''). Here, Geisinger is effectively 
transferring substantial revenue to a competitor to avoid a threat 
of increased competition.\40\ As in the pay-for-delay cases, finding 
a valid business reason for such a flow of consideration is not 
easy, and the DOJ did not suggest any justification in its 
Competitive Impact Statement.\41\ Bestowing millions of dollars of 
discounts on Evangelical should evoke as much suspicion as above 
market sales, particularly when the discounts are born from an 
anticompetitive collaboration.
---------------------------------------------------------------------------

    \39\ King Drug Co. of Florence, Inc. v. SmithKline Beecham 
Corp., 791 F.3d 388, 402 (3d Cir. 2015) (quoting FTC v. Actavis, 
Inc., 570 U.S. 136, 140-41 (2013)) (``In a reverse payment 
settlement, the patentee ``pays money . . . purely so [the alleged 
infringer] will give up the patent fight.'' These payments are said 
to flow in `reverse' because `a party with no claim for damages 
(something that is usually true of a paragraph IV litigation 
defendant) walks away with money simply so it will stay away from 
the patentee's market.' '').
    \40\ While it is true that the consideration in Actavis resulted 
in express contractual commitments not to compete, that distinction 
is not material in this context; rather the consideration (part of 
the partial collaboration) results in the same anticompetitive 
effects- reduced competition in the relevant market.
    \41\ Cf. In re High Fructose Corn Syrup Antitrust Litig., 295 
F.3d 651, 659 (7th Cir. 2002) (emphasis in original) (when one 
competitor sources from another competitor at a higher cost than 
internal production, this could signify that the conduct ``is a way 
of shoring up a sellers' cartel by protecting the market share of 
each seller.''); In re Titanium Dioxide Antitrust Litig., 959 F. 
Supp. 2d 799, 815 (D. Md. 2013) (``Instead of competing for 
Millenium's customers, DuPont appears to have provided help to 
Millennium, selling titanium dioxide at a rate lower than that on 
the market.''); In re Ethylene Propylene Diene Monomer (EPDM) 
Antitrust Litig., 681 F. Supp. 2d 141 (D. Conn. 2009) (holding that 
selling to a competitor at below market prices created an inference 
of a price-fixing conspiracy).
---------------------------------------------------------------------------

    The example of Susquehanna Health, now UPMC Susquehanna, is 
instructive here. As mentioned above, Susquehanna joined UPMC in 
2016, after rebuffing advances from Geisinger similar to those made 
to Evangelical. Geisinger had offered to provide for all of 
Susquehanna's needed IT expenditures, which were valued at tens of

[[Page 51194]]

millions of dollars. Had Susquehanna received that money from 
Geisinger, or a subsidy like that contemplated here, Susquehanna's 
incentive to join UPMC would have been reduced. And even if it had 
remained technically ``independent,'' it would have become dependent 
on Geisinger's aid, to the detriment of consumers in the region. The 
same is true here.
    Leaving aside Geisinger's interference with Evangelical's path 
toward becoming a stronger competitor to Geisinger, the IT 
arrangement thoroughly entangles Geisinger with Evangelical. 
Evangelical will become dependent on Geisinger to provide and manage 
the key IT systems required for the successful management of 
Evangelical's health care operations and patient care. And aside 
from dependency on Geisinger's subsidies, the difficulty and cost of 
potentially having to uproot and integrate a new IT system in the 
future will make Evangelical even more hesitant to cross Geisinger 
for fear that its infrastructure may also be at risk. This will 
further reduce competition in the market. The Complaint repeatedly 
references the fact that the entanglements between Evangelical and 
Geisinger bode ill for consumers. Although DOJ has accomplished a 
number of disentanglements, the IT Entanglement, like the Margin 
Guarantee discussed above, still remain and create unnecessary 
competitive risks.
    As any healthcare provider understands, today's healthcare 
delivery is heavily dependent on the utilization of a modern 
Electronic Medical Record (``EMR'') system, which impacts boththe 
physician and patient. The Second Amended Collaboration Agreement at 
issue outlines the IT Entanglement as follows:
    <bullet> Geisinger ``will provide its electronic medical system 
records systems (EPIC and related embedded clinical systems, 
including a license to the embedded Geisinger intellectual property) 
at an 85% discount'' to Evangelical;
    <bullet> Geisinger will provide support for such systems at an 
85% discount to Evangelical; and
    <bullet> The parties will enter an IT sharing agreement, whereby 
Geisinger will provide additional back office systems to Evangelical 
at commercially reasonable rates.\42\
---------------------------------------------------------------------------

    \42\ See Second Amended Collaboration Agreement, Sec.  6.5, ECF 
No. 51-3, at 9.
---------------------------------------------------------------------------

    Every EMR system is different; in fact, an EMR provided by Epic 
Systems at two different hospitals will often be different from one 
another in meaningful ways, which can limit their interoperability. 
The goal for EMRs is to allow providers to exchange information and 
seamlessly integrate it into their own systems.\43\ Laws, 
regulations, and standards establish some EMR interoperability 
requirements, but actual true, complete, and seamless 
interoperability between different EMR's is dependent on 
implementation.\44\
---------------------------------------------------------------------------

    \43\ U.S. GOV'T ACCOUNTABILITY OFF., GAO-15-817, ELECTRONIC 
HEALTH RECORDS NONFEDERAL EFFORTS TO HELP ACHIEVE HEALTH INFORMATION 
INTEROPERABILITY 4 (2015) [hereinafter GAO INTEROPERABILITY REPORT], 
https://www.gao.gov/assets/gao-15-817.pdf.
    \44\ See Lucia Savage, Martin Gaynor, and Julia Adler-Milstein, 
Digital Health Data and Information Sharing: A New Frontier for 
Health Care Competition?, 82 ANTITRUST L. J., 593, 604 (2019) 
[hereinafter Health Care Competition?]; GAO INTEROPERABILITY REPORT 
1-2; 12 (``Stakeholders and representatives from the selected EHR 
initiatives described five key challenges to achieving EHR 
interoperability; (1) insufficiencies in standards for EHR 
interoperability, (2) variation in state privacy rules, (3) 
accurately matching patients' health records, (4) costs associated 
with interoperability, and (5) need for governance and trust among 
entities.''). See also id. at 596 (``Whether these provisions will 
be sufficiently strong to overcome firms' incentives to engage in 
information blocking remains an open question.'').
---------------------------------------------------------------------------

    Under the Second Amended Collaboration Agreement, like the 
original version, Evangelical will be brought into Geisinger's 
version of Epic, meaning that Geisinger and Evangelical will be on 
an integrated EMR infrastructure. Patient referrals between 
Evangelical and Geisinger will be easier within the integrated 
platform. Patient records will be easier to access across 
Evangelical and Geisinger. Patient scheduling will be fluid between 
Evangelical and Geisinger provider facilities.
    In the abstract, one might conclude these are unambiguously 
procompetitive efficiencies, but the reality is that Evangelical 
could achieve any such efficiencies either on its own or with 
``affiliation with a partner other than its primary competitor.'' 
\45\ As a result, likely anticompetitive effects outweigh any such 
efficiencies. The IT Entanglement is inextricably linked to the 
goals of the original collaboration: Bringing Evangelical into the 
Geisinger fold and making it more difficult for others to compete 
with the collaboration. Geisinger and Evangelical intended their IT 
integration to be seamless; there is no suggestion they intended 
that others share their outcome. Yet, the IT Entanglement remains 
essentially unchanged. Other providers and payers will face more 
friction when trying to work with Evangelical or compete for 
patients. And in furtherance of the collaboration's goal to insulate 
Geisinger and Evangelical from outside competition, they will likely 
``make it harder than it needs to be (legally or technically) for 
patients to take their data to other [health care organizations] 
because this can inhibit patients or customers from moving their 
business to competing providers.'' \46\
---------------------------------------------------------------------------

    \45\ Cf. FED. TRADE COMM'N, FED. TRADE COMM'N STAFF SUBMISSION 
TO THE SOUTHWEST VIRGINIA HEALTH AUTHORITY AND VIRGINIA DEPARTMENT 
OF HEALTH REGARDING COOPERATIVE AGREEMENT APPLICATION OF MOUNTAIN 
STATES HEALTH ALLIANCE AND WELLMONTHEALTH SYSTEM 35 (2016), https://www.ftc.gov/system/files/documents/advocacy_documents/submission-ftc-staff-southwest-virginia-health-authority-virginia-department-health-regarding/160930wellmontswvastaffcomment.pdf. FTC staff 
concluded that many of the purported efficiencies were not 
significant, and to the extent that they could be validated, were 
achievable by less restrictive means. Id. at 34-36.
    \46\ Id. at 604.
---------------------------------------------------------------------------

    Of particular interest here, the discussion of recent Medicare 
Program amendments acknowledges that a prohibition on information 
blocking was intended to ensure the ``policy goal of fully 
interoperable health information systems and will not be misused to 
steer business to the donor [hospital].'' \47\ While UPMC has no 
reason to believe that total ``information blocking'' will occur, 
UPMC is concerned that Geisinger will necessarily gain an unfair 
competitive advantage through the IT Entanglement and subsequent 
additional entanglements if those legacy provisions are not 
eliminated from the Second Amended Collaboration Agreement.\48\
---------------------------------------------------------------------------

    \47\ Medicare Program; Modernizing and Clarifying the Physician 
Self-Referral Regulations, 85 FR 77492, 77611 (Dec. 2, 2020) (Final 
Rule).
    \48\ Health Care Competition? at 596 (short of an outright 
information block, defendants still can ``engage[ ] in practices 
that impede efficient access and use of the data by competitors or 
other individuals or entities.'').
---------------------------------------------------------------------------

    As one example, because the agreement apparently anoints 
Geisinger as Evangelical's IT gatekeeper, when the inevitable 
technological glitch arises between UPMC (or United or Aetna) and 
Evangelical, Geisinger apparently would be responsible for fixing 
the problem.\49\ That alone should raise concerns. Similarly, the 
Office of the National Coordinator for Health Information Technology 
(``ONC'') explains that, under the Cures Act Final Rule:
---------------------------------------------------------------------------

    \49\ See Second Amended Collaboration Agreement, Sec.  6.5, ECF 
No 51-3, at 9; EPIC SYSTEMS CORP., ONC Health IT Certification 
Details, at 3 (May 18, 2021) (where ``[a]n Epic client extends 
access to its EHR to a hospital . . . [t]he Epic client's IT staff 
provide installation and ongoing support services.''), https://www.epic.com/docs/mucertification.pdf.

    It will not be information blocking if an actor does not fulfill 
a request to access, exchange, or use EHI due to the infeasibility 
of the request, provided certain conditions are met.''
    It will not be information blocking for an actor to charge fees, 
including fees that result in a reasonable profit margin, for 
accessing, exchanging, or using EHI, provided certain conditions are 
met.\50\
---------------------------------------------------------------------------

    \50\ Information Blocking, ONC'S CURES ACT FINAL RULE, https://www.healthit.gov/curesrule/final-rule-policy/information-blocking 
(last visited May 30, 2021).

    Geisinger and Evangelical also have other means at their 
disposal to make patient transfers to other providers more 
difficult. Those include making it difficult to match patients' 
health records stored across different systems \51\ and making it 
``challenging to establish the governance and trust'' related to 
patient information exchange practices.\52\ By subsidizing, 
supporting, and essentially controlling Evangelical's IT, the IT 
Entanglement further solidifies the relationship between the two

[[Page 51195]]

largest providers in the market.\53\ How the entangled Geisinger-
Evangelical exercises potential discretionary acts to permit or 
impede interoperability is critical to how competition plays out in 
the region.\54\ There is no mechanism in the PFJ to assure that UPMC 
and others are not disadvantaged. Given ``the history of 
coordination between Defendants,'' and the fact that the IT 
Entanglement, like the Margin Guarantee, was an integral part of the 
original collaboration agreement, no ``self-serving representations 
about their intent to continue to compete'' can overcome the logic 
and intuition that this Entanglement is bad for consumers.
---------------------------------------------------------------------------

    \51\ GAO INTEROPERABILITY REPORT at 13.
    \52\ Id. at 14 (``These governance practices can include 
organizational policies related to privacy, information security, 
data use, technical standards, and other issues that affect the 
exchange of information across organizational boundaries. One 
stakeholder noted that it is important to establish agreements to 
ensure that entities share information openly with all other 
participants in a network.'').
    \53\ Cf. id. at 595 (``Holding on to data may allow market 
participants to maintain, and in some cases enhance, their market 
position.'').
    \54\ Id. at 607 (``strateg[ies] for data holders to impede data 
transfer and thwart competition . . . may be a version of the 
strategy of raising rivals' costs to thwart competition.'').
---------------------------------------------------------------------------

    Further, once Evangelical is fully integrated into the Geisinger 
technology ecosystem, this arrangement will give Geisinger 
additional leverage over Evangelical, which will be dependent on 
both the use of the EMR system and Geisinger's technical support to 
operate it. UPMC is unaware of any other instance where a dominant 
health system has subsidized an EMR system for its closest hospital 
competitor. It is simply unheard of to fund--to the point of a near 
giveaway--such a crucial resource in these circumstances. Geisinger 
and Evangelical together already possess a ``dominant position'' in 
the relevant inpatient general acute-care market, with a combined 
share greater than 70%. Compl. ] 41, 64. And the existence of 
significant barriers to entry, id. at ] 68, as well as their history 
of ``co-opetiton''--``coordinat[ing] their activity to `find wins' 
at the expense of robust competition,'' id. at ] 27--demonstrates 
this subsidy will lead to further dominance of the relevant market. 
Finally, as the DOJ recognized, there are less restrictive 
alternatives available for Evangelical to upgrade its IT system. See 
Compl. ] 65 (``Evangelical also could have obtained funds for 
capital improvements from sources other than Geisinger, its closest 
competitor.'').
    The Second Amended Collaboration Agreement refers to ``an 
existing Anti-Kickback and Stark Safe Harbor.'' See Second Amended 
Collaboration Agreement at Section 6.5. Presumably it refers to 
Stark Act exceptions (42 CFR 1001.952(y) and 42 CFR 411.357(w)), 
which, under certain circumstances, permit institutions, like 
hospitals or health plans, to subsidize IT upgrades to physicians 
and physician practices. Because these relationships are primarily 
vertical, the potential efficiencies are easily understood. Here, 
however, the Complaint recognizes that the relationship between 
Geisinger and Evangelical is also heavily horizontal--they are 
competitors. Payments between horizontal competitors under these 
circumstances have the risks identified above. And while 42 CFR 
1001.952(y) and 42 CFR 411.357(w) may allow the provision of IT 
systems in some circumstances, even if applicable here, they would 
not convey any antitrust immunity on the parties. Cf. FTC v. Phoebe 
Putney Health Sys., Inc., 568 U.S. 216, 228 (2013) (``while the Law 
does allow the Authority to acquire hospitals, it does not clearly 
articulate and affirmatively express a state policy empowering the 
Authority to make acquisitions of existing hospitals that will 
substantially lessen competition''). Similar to Phoebe, a hospital 
might have authority to merge, but that does not provide the 
hospital with the right to violate Section 7 of the Clayton Act or 
Section 1 of the Sherman Act.
    UPMC does not contend that an arms-length license between 
Geisinger and Evangelical would be per se unlawful. As the Complaint 
recognizes, ``Defendants were in discussion to do so long before 
this transaction was under consideration.'' Compl. ] 64.
    However, the terms likely would have been much different absent 
the Margin Guarantees and the $20 million payment that Evangelical 
is permitted to retain as part of this settlement. If this 
transaction is voided, Evangelical loses the Margin Guarantee and 
potentially has to pay back the $20 million. Without those side 
payments, Evangelical might not be so quick to lock itself into 
Geisinger's IT for the foreseeable future. The legality of such a 
license need not be decided today; rather it is only necessary to 
understand that the contemplated license, part of the original 
Collaboration Agreement, was created in anticipation of, and has the 
effect of, a reduction in competition.

Sharing Competitively Sensitive Information With a Horizontal 
Competitor

    Finally, the PFJ fails to resolve concerns raised in the 
Complaint about the ability of Geisinger and Evangelical to exchange 
competitively sensitive information under various provisions of the 
Second Amended Collaboration Agreement. See CIS at 14-15.
    As the DOJ and FTC's Antitrust Guidelines for Collaborations 
Among Competitors state:

[T]he sharing of information related to a market in which the 
collaboration operates or in which the participants are actual or 
potential competitors may increase the likelihood of collusion on 
matters such as price, output, or other competitively sensitive 
variables. The competitive concern depends on the nature of the 
information shared. Other things being equal, the sharing of 
information relating to price, output, costs, or strategic planning 
is more likely to raise competitive concern than the sharing of 
information relating to less competitively sensitive variables.\55\
---------------------------------------------------------------------------

    \55\ DEP'T OF JUSTICE AND FED. TRADE COMM'N., ANTITRUST 
GUIDELINES FOR COLLABORATIONS AMONG COMPETITORS 15 (2000) (emphasis 
added), https://www.ftc.gov/sites/default/files/documents/public_events/joint-venture-hearings-antitrust-guidelines-collaboration-among-competitors/ftcdojguidelines-2.pdf.

    Here, Paragraph B.6 of the Addenda expressly requires Geisinger 
and Evangelical to share some competitively sensitive information on 
a monthly basis throughout the year as part of an annual review and 
rate reset.\56\ The provision also calls for the parties to review 
``relevant information . . . such as [Geisinger] Health Plan 
commercial volume at [Evangelical], total revenue received by 
[Evangelical] from [Geisinger] Health Plan commercial members, 
[Evangelical] costs, case mix, etc.'' \57\
---------------------------------------------------------------------------

    \56\ ECF No. 51-3, at 56 (Sec.  B.6), at 61 (Sec.  B.6).
    \57\ Id.
---------------------------------------------------------------------------

    Insurers do not receive cost information from providers as there 
is simply no reason to give it. Even more problematic is the case 
here, where a vertically integrated provider and health plan, such 
as Geisinger, receives cost information from another provider--and 
particularly its closest competitor. In fact, UPMC, which also 
operates as a vertically integrated provider and health plan, has 
never received cost information from competitive third-party 
providers and UPMC does not share its cost structure with any 
insurer. Information sharing raises red flags and could facilitate 
collusion between competitive providers operating in the same 
market.
    The Addenda do not require installation of a firewall between 
Geisinger Health Plan and Geisinger providers--nor would a firewall 
be sufficient in this circumstance. Firewalls come with some risk of 
circumvention. Therefore, firewalls are typically only used in 
antitrust matters as a last resort to enable a procompetitive 
benefit. But as the Complaint states, there are no procompetitive 
benefits here. See Compl. ] 67. As a result, even if the PFJ were to 
require a more comprehensive firewall regarding Evangelical's cost 
data, the public would still bear the risks of competitive harm 
without any corresponding benefit.
    The public also bears risks associated with the information 
Geisinger and Evangelical intend to share because the provisions in 
this paragraph are vague and not fully defined. What type of 
information do Geisinger and Evangelical intend to share through the 
indeterminate term ``etc.'' ? In the event the Margin Guarantee 
survives, UPMC encourages the DOJ to require Geisinger and 
Evangelical to delete the term ``etc.'' and require Geisinger and 
Evangelical to state exactly what information they have agreed to 
share. The DOJ should then assess (or reassess) the potential for 
anticompetitive harm from the information sharing.
    The Addenda also raise additional concerns that Evangelical may 
share rate information of other health plans, such as UPMC, with 
Geisinger Health Plan. Although the Addenda state, ``[a]ctual payer 
rates shall not be shared between the parties,'' \58\ the Margin 
Guarantee scheme devised by Evangelical and Geisinger requires 
comparison between the margins paid by Geisinger and other health 
plans for Evangelical patients won by Geisinger. Even if rate 
information is not shared directly, margin information supplied by 
Evangelical, combined with Geisinger's payer- side knowledge, could 
allow Geisinger to derive Evangelical's provider rates for other 
health plans, including those of UPMC.
---------------------------------------------------------------------------

    \58\ ECF No. 51-3 at 59, 64.
---------------------------------------------------------------------------

    Exhibit A to the Addenda,\59\ illustrates how this happens. In 
the example with ``decreased margin,'' Geisinger's rates with 
Evangelical increase if it takes a patient

[[Page 51196]]

receiving care at Evangelical who is insured by a health plan that 
has higher rates at Evangelical than does Geisinger. Likewise, in 
the example with ``increased margin,'' Geisinger's rates with 
Evangelical decrease if Geisinger takes a patient receiving care at 
Evangelical who is insured by a health plan that has lower rates at 
Evangelical than does Geisinger. And, of course, Geisinger knows its 
own provider rates at Evangelical. With this information, a simple 
comparison allows Geisinger to gain great insight into other health 
plans' rates at Evangelical depending on whether Geisinger's rates 
go up or down.
---------------------------------------------------------------------------

    \59\ Id.
---------------------------------------------------------------------------

    We have attempted to identify some of the potential competitive 
harms that could arise if Geisinger Health Plan learns its 
competitors' rates at Evangelical. Suffice it to say that this type 
of information sharing is not in the public interest. We encourage 
the DOJ to modify the PFJ to resolve this concern.

Requested Modifications

    For the reasons detailed above, UPMC urges the total elimination 
of the Second Amended Collaboration Agreement, including the Margin 
Guarantee and IT Entanglement.\60\
---------------------------------------------------------------------------

    \60\ Although the approximate $20 million payment helps 
Geisinger achieve its objective of preventing Evangelical from 
teaming up to become a stronger competitor, UPMC believes that (a) 
requiring repayment would be unduly disruptive; and (b) the removal 
of the other provisions will go a long way toward restoring the 
status quo ante.
---------------------------------------------------------------------------

    In the event that the DOJ declines that remedy, there are other 
options that would improve the relief:
    <bullet> Include a provision whereby the DOJ monitors 
Evangelical's actions with respect to UPMC and other payers. This 
should include maintaining authority to intervene for some period in 
the event that Evangelical terminates provider contracts with UPMC 
or others absent exigent circumstances, or imposes rate increases 
out of line with commercial realities.
    <bullet> As a condition of permitting the 7.5% ownership, Margin 
Guarantee, and IT Entanglement provisions, require that Evangelical 
enter into a 10-year contract with UPMC Health Plan on reasonable 
terms and conditions.\61\
---------------------------------------------------------------------------

    \61\ UPMC wishes to emphasize that this proposal relates only to 
the partial acquisition, and is not relief that should be imposed on 
Evangelical if the transaction is voided.
---------------------------------------------------------------------------

    <bullet> Insofar as the Geisinger IT Entanglement will 
effectively lock-in Evangelical to the whims of Geisinger, develop 
and include provisions that ensure that Geisinger cannot use this 
leverage to punish Evangelical for collaborating in any fashion with 
UPMC or others. More generally, the DOJ should include a mechanism 
whereby it can assure that other payers are not disadvantaged.\62\
---------------------------------------------------------------------------

    \62\ See UNITED STATES DEP'T OF JUSTICE, ANTITRUST DIVISION 
POLICY GUIDE TO MERGER REMEDIES 14-16 (2011) (discussion of use of 
non-discrimination, transparency, and anti-retaliation provisions in 
conduct remedies), https://www.justice.gov/sites/default/files/atr/legacy/2011/06/17/272350.pdf.
---------------------------------------------------------------------------

    <bullet> Impose stronger protections to ensure that payer 
information obtained by Evangelical is not shared with Geisinger, in 
the course of rate discussions pertaining to the Margin Guarantee or 
otherwise, including in any form that could allow Geisinger to 
derive price, cost, or margin information about other payers.

Conclusion

    The risk of doing nothing here far exceeds the risk from taking 
action. If UPMC is correct about the likely competitive harm of the 
legacy provisions discussed, and nothing is done, a duopoly with a 
pre-existing pattern of ``co-opetition'' becomes more intertwined, 
and an already concentrated market becomes even less competitive. 
Indeed, with Geisinger constantly in Evangelical's ear, it is 
conceivable that Evangelical could follow Geisinger's example and 
not provide UPMC Health Plan with a provider contract.\63\ 
Currently, Evangelical has no reason not to contract with UPMC. 
However, if Geisinger persuades Evangelical to cancel the UPMC 
contract, consumers would lose out on competition by UPMC for a 
variety of health plans, including Medicare and Special Needs Plans 
(``SNPs''), Medicaid, and Community Health Choices (``CNC'') 
plans.\64\ A remedy for such an action would be difficult, and 
Evangelical would argue that termination was in its independent 
interest, given the incentives in the Second Amended Collaboration 
Agreement provisions at issue.\65\
---------------------------------------------------------------------------

    \63\ Also, if this case presents a false positive--that is, 
assuming arguendo that the provisions are not actually 
anticompetitive--the worst case ``harms'' are that Evangelical has 
to purchase its IT at fair market value and continues with its 
previous payer contract with Geisinger. These cannot really be 
characterized as cognizable harms to competition.
    \64\ The loss of competition would not be easily repaired. See 
United States v. Aetna Inc., 240 F. Supp. 3d 1, 57 (D.D.C. 2017) 
(regarding Medicare Advantage, ``the expert analysis and the other 
evidence paint a picture of new entry not being particularly likely, 
and the barriers to entry being high.'').
    \65\ Cf. United States v. Phila. Nat. Bank, 374 U.S. 321, 362 
(1963) (Section 7 of the Clayton Act ``was intended to arrest 
anticompetitive tendencies in their `incipiency.' ''); H. Hovenkamp, 
Prophylactic Merger Policy, 70 HASTINGS L. REV. 45, 48 (2018) 
(``Incipiency tests for mergers are most valuable in cases where a 
merger is likely to lead to conduct or behavior that is both 
anticompetitive and also is difficult or impossible for antitrust 
law to reach once the merger has occurred.'').
---------------------------------------------------------------------------

    The best ``prediction of [these provision's] impact upon 
competitive conditions in the future,'' \66\ absent additional 
relief, is harm to consumers in the relevant market. Under such 
conditions, the DOJ should take additional steps to ensure that the 
remedy comports with the harms alleged in the Complaint.
---------------------------------------------------------------------------

    \66\ FTC v. Penn State Hershey Med. Ctr., 838 F.3d 327, 344 
(2016) (quoting Phila. Nat. Bank, 374 U.S. at 362).
---------------------------------------------------------------------------

Sincerely,

Richard B. Dagen
Keith Young

[REDACTED]

Eric Welsh

    In regards to the decision to limit the scope of the Geisinger-
Evangelical Hospital merger. This idea was presented to the public 
as a partnership, not a merger. While technically they are very 
similar, to a layman such as I the word merger has a more ominous 
sound. Thus merger was not used in the press releases.
    Geisinger and its regional competitor UPMC have been 
systematically purchasing small local community hospitals. In the 
case of UPMC purchasing and then closing the Sunbury Comm. Hosp. 
While this is a gain to their business structure the local citizenry 
now has few options in find quality and affordable healthcare
    I'm sure that what I see as a local issue you can see it on the 
national stage and that is the fact that this countries medical 
system is being taken over by conglomerates.
    It is actually very similar to going to a supermarket. You see 
endless choices until you look closer. You see Heinz Ketchup, 
Nabisco cookies, Coke & Pepsi. They all have multiple varieties of 
their own product but in reality, the consumer is locked into a 
limited diversity of choices.
    You have the power to make sure people looking for good 
affordable health care have that choice.

Respectfully,

Keith A. Young

RE: Geisinger/Evangelical Merger

[REDACTED]

March 8, 2021

Dear Mr. Welsh,

    I have been a patient at both Geisinger and Evangelical 
facilities. Both are fine establishments, however, there is a huge 
difference in atmosphere and friendliness as well as cost.
    Evangelical is a community based, friendly hospital as opposed 
to the giant Geisinger which has acquired many private practice 
physician offices as well as Bloomsburg Hospital and Shamokin 
Hospital. These were both small home-town hospitals prior to 
Geisinger's acquisition.
    We are located in a rural area that is being dominated by large 
corporations where the profit comes before the patient.
    The average income in this area is moderate and even with health 
insurance, out-of-pocket expenses can be taxing to patients.
    Patient care is of the essence. Evangelical can give patients 
the best care by remaining an independent community hospital.
    Competition is essential and Geisinger and UPMC are trying to 
eliminate it.
    Please do not let Geisinger acquire Evangelical Hospital.

Sincerely,

Sandy Young

[FR Doc. 2021-19800 Filed 9-13-21; 8:45 am]
BILLING CODE 4410-11-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>