The American Hospital Association wants the U.S. Justice Department to block the merger of Pennsylvania’s two biggest health insurers.

The hospital advocacy organization expresses concern that the combination of Pittsburgh’s Highmark Inc. and Philadelphia’s Independence Blue Cross would lead to a “huge accumulation of market power.”

Of course, these arguments were made by hospitals last year when the two insurers announced they wanted to merge. The Justice Department took no action in May 2007, but the hospital association says federal regulators get another chance because the deal is not done.

While Pennsylvania’s Insurance Department has been reviewing thousands of pages of documents filed in connection with the merger, it has not held hearings on the transaction. Officials have said that they will likely occur this summer.

The American Hospital Association represents about 5,000 hospitals, including many in Pennsylvania that fear a bigger insurer would be able to cut reimbursement for providing care for patients. In a letter to the Justice Department, it says:

An IBC/Highmark combination could easily use its enormous market power to drive reimbursement below competitive levels and to force anticompetitive contract terms on providers.

Hospitals obviously want to protect their revenue stream. But the association also warns that if a bigger Blue Cross gets too powerful “advances in quality and performance” at hospitals could be limited.

And while Highmark and Independence Blue Cross officials have touted wringing out about $1 billion in savings from their combination, the hospital association questions whether any of those savings will trickle down to consumers.

It’s a good try by the American Hospital Association, but I doubt federal regulators will bite on their request.

Maybe the national hospital group is only firing a warning shot. Maybe the real contest will come in Harrisburg this summer.

Philly Ticker

Powered by a big increase in first-quarter earnings, Rait Financial Trust was the biggest-moving local stock last week. Its shares rose 20 percent last week to close Friday at $9.30. This Philadelphia company provides debt financing to the real estate industry. It reported net income of $133.5 million, or $2.14 per share, for the three months ended March 31. Compare that with the $22.9 million, or 34 cents per share, for the same quarter in 2007, and you see why the stock price popped.

Peppy Pay

Pep Boys’ former CEO drove away with a trunk full of Manny, Moe & Jack’s dough for his brief tenure.

The Philadelphia auto parts and service chain lists total 2007 compensation for Jeffrey Rachor as $10.64 million, according to its proxy statement filed on Friday. Rachor was CEO from March 13, 2007, to April 22, 2008. Not bad for little more than nine months of work.

Rachor resigned last month to become the CEO of a new car dealership group backed by Dell Inc. founder Michael Dell.

Annual Meetings

This week’s shareholders meetings:

Abington Bancorp, Eastern Insurance Holdings, Entercom Communications, NutriSystem (Tuesday.)

Bio-Imaging Technologies, Comcast, Power Medical Interventions, Quaint Oak Bancorp, SL Industries (Wednesday.)

Aqua America, Liberty Property Trust, Sun Bancorp, Technitrol (Thursday.)

Philadelphia Consolidated Holding (Friday.)

Earnings

Today: A.C. Moore Arts & Crafts, Kenexa, Orleans Homebuilders, Radian Group;

Wednesday: eGames, Encorium, Dynasil, Prescient Applied Intelligence;

Thursday: Astea, BMP Sunstone, Constar, Escalon Medical, Urban Outfitters;

Friday: Sedona.