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before an Illinois court, and Advocate and NorthShore are proposing a pro- competitive argument that has never been offered before in a merger challenge.283 To bolster their proposed merger to the FTC, Advocate and NorthShore proposed a new coordinated health insurance product that would be offered on the market at a price at least ten percent lower than the cheapest comparable health plan.284 Additionally, a health system operating a provider-owned health plan is incentivized to manage and focus on preventative care.285 By focusing on preventative care, overall healthcare costs decrease and patients benefit from better quality care.286 The traditional function of the insurance company may decline if healthcare providers continue to enter into the insurance business. This could effectively eliminate the traditional function of the insurance company as an individual stakeholder at odds with the health provider.287 “Once the system becomes an insurer, picking up the tab for a hospitalization rather than generating income from it, more resources will be devoted to preventative care.”288
D. Already Happening
Health systems realize that the traditional negotiations for individual units of services are over. Now, health systems fully understand that in today’s health care delivery market, “[n]o outcome, no income.”289 The idea of systems offering health plans is not novel. Thirteen percent of healthcare systems in the United States offer a health plan.290 For over thirty years,
NORTHSHORE, http://www.northshore.org/newsroom/press-releases/northshore-advocate- merger/ (last visited Mar. 30, 2016); see Peter Frost, Advocate, NorthShore Punch Back at FTC, CRAIN’S (Mar. 23, 2016), http://www.chicagobusiness.com/article/20160323/NEWS03/ 160329925/advocate-and-northshore-punch-back-against-ftc (noting the recent activity in response to the FTC block of the proposed Advocate and NorthShore merger). 283. Lisa Schencker, Uphill FTC Fight Starts this Week for Big Chicago-Area Health Systems, MODERN HEALTHCARE (Apr. 4, 2016), http://www.modernhealthcare.com/article/ 20160404/NEWS/160409959/uphill-ftc-fight-starts-this-week-for-big-chicago-area-health- systems. 284. Frost, supra note 282. 285. Herman, The Risks, supra note 257. 286. Ellison, supra note 172. 287. Burns, supra note 245 (“The models being emulated are similar to organizations such as Geisinger and the University of Pittsburgh Medical Center (UPMC) that are already in the insurance business. . . They operate hospitals, medical groups, and HMOs.”); see Ellison, supra note 172 (noting the new trend in health care that health systems are buying insurance companies and operating their own health plan). 288. Rabin, supra note 253 289. Burns, supra note 245. 290. Bara Vaida & Alexander Wess, Health Care Consolidation, ALL HEALTH (Nov. 2015), http://www.allhealth.org/publications/Consolidation-Toolkit_169.pdf.