FOR IMMEDIATE RELEASE                                          AT
MONDAY, JULY 7, 1997                               (202) 616-2771
                                               TDD (202) 514-1888

 JUSTICE DEPARTMENT CONCLUDES PROPOSED GASTROENTEROLOGISTS MERGER
            POSES SUBSTANTIAL RISK OF COMPETITIVE HARM

     WASHINGTON, D.C. -- The Justice Department today said a
proposed merger by 12 of the 14 gastroenterologists in Allentown,
Pennsylvania is likely to lessen competition in the market for
gastroenterology services in the Allentown/Bethlehem area.
 
     The Department's position was stated in a business review
letter from Acting Assistant Attorney General Joel I. Klein, head
of the Antitrust Division, to the counsel for the three group
practices comprising the 12 doctors proposing to merge. 
 
     Klein noted that the merger would likely enable the
gastroenterologists to raise prices and impose other
anticompetitive contract terms on health care plans serving
Allentown and Bethlehem. The Department also found that the
merger would not create any likely merger-specific efficiencies
to offset the anticompetitive effects.

     After a thorough investigation, the Department concluded
that other physicians outside the Allentown/Bethlehem area were
not adequate substitutes for the merging gastroenterologists and
would not prevent anticompetitive effects. 

     Although other types of physicians perform some of the same
procedures as gastroenterologists, health plans indicated that
they could not successfully market a health benefits product in
the Lehigh Valley area if gastroenterologists were not included
on their provider panels. 

     The newly formed group would account for as much as 92
percent of the gastroenterologists in Allentown and 66 percent in
the Allentown/Bethlehem area.

     The Department also rejected the groups' proposal for
testing the effects of the merger in the broader geographic
market of Lehigh and Northampton Counties, Carbon County to the
north, the eastern portion of Berks County to the west, and the
northern portion of Bucks county to the south. Managed care plans
and other payers said that gastroenterologists outside the
Allentown/Bethlehem area are too far away to be acceptable
substitutes for the merging groups. Payers could not successfully
divert patients to those distant gastroenterologists to defeat an
anticompetitive price increase by the merging groups. Payers also
doubted that gastroenterologists entering from outside the
Allentown/Bethlehem area would influence an attempted price
increase by the merged groups.

     Under the Department's business review procedure, a person
or organization may submit a proposed action to the Antitrust
Division and receive a statement as to whether the Division will
challenge the action under the antitrust laws.

     A file containing the business review request and the
Department's response may be examined in the Legal Procedure Unit
of the Antitrust Division, Room 215 North, Liberty Place,
Department of Justice, Washington, D.C. 20530.  After a 30-day
waiting period, the documents supporting the business review will
be added to the file.
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