Reading (Pa.) Health System announced that its deal to acquire the Surgical Institute of Reading was off after the Federal Trade Commission said it would fight to stop the transaction.

“Obviously, we are disappointed with the government's decision,” said Clint Matthews, Reading Health System's president and CEO, in a written statement. “But a formal rebuttal to the government challenge could take years in court and would expend considerable human and monetary resources. So we have made the prudent decision to move on, committed to continuing to serve our region with the highest level of quality and consistency of care.” A Reading spokesman declined an interview request.

The FTC announced plans last week to challenge the health system's acquisition of the physician-owned hospital, which was first announced in May. The FTC said in a news release the deal would “substantially reduce competition in the area surrounding Reading, Pa., and lead to reduced quality and higher healthcare costs for the area's employers and residents.”

Matthews rejected the FTC's claims that competition and quality would suffer and costs would rise as a result of the deal, but said the partners mutually agreed to call of the deal because a legal fight would be lengthy and costly.