Earlier this year, the Federal Trade Commission requested an additional $160 million for its 2024 budget to support healthcare merger challenges, rulemaking and investigations. Of that $160 million, $70 million is earmarked for hiring more than 300 employees as the agency ramps up antitrust enforcement against health system mergers and acquisitions.
The Justice Department’s antitrust division has also informed payers and providers that it is applying more scrutiny to healthcare transactions, including ramping up its post-merger investigations and looking into attempts to illegally monopolize healthcare markets.
Here are six cases in which the FTC has challenged health system mergers or acquisitions in the last two years, beginning with the most recent:
1. John Muir Health and Tenet Healthcare
On Nov. 17, the FTC sued to block John Muir Health’s proposed $142.5 million acquisition of San Ramon (Calif.) Regional Medical Center from majority owner Tenet Healthcare, arguing that the deal will drive up healthcare costs.
Walnut Creek, Calif.-based John Muir Health has held a 49% stake in the 123-bed hospital since 2013. Under the proposed deal, it would acquire the remaining 51% interest from Dallas-based Tenet.
The FTC alleges the transaction would eliminate head-to-head competition between John Muir and San Ramon Regional and is seeking a temporary restraining order and preliminary injunction to prevent John Muir from taking control of the hospital.
John Muir is evaluating its options and next steps, including challenging the FTC decision in court, John Muir President and CEO Mike Thomas said in a statement shared with Becker’s.
2. LCMC Health and HCA Healthcare
A federal judge ruled in September that LCMC Health sought the correct state approvals for its $150 million acquisition of three Tulane University hospitals from Nashville, Tenn.-based HCA Healthcare.
The issue in the antitrust case was whether or not LCMC should have sought federal approval before finalizing its purchase of the hospitals. The FTC had ordered the New Orleans-based system to halt the acquisition while it conducted a review, but the Louisiana legislature and state attorney general had “expressly and unequivocally authorized” the deal to go through, according to court documents obtained by Becker’s.
Louisiana is one of about 20 states that gives the state the authority to greenlight hospital mergers under the certificate of public advantage process. Because of this, LCMC argued in court documents that the acquisition is “indisputably immune” from federal antitrust laws, according to nola.com.
Since Louisiana law gives regulatory oversight of hospital consolidations to the office of the state attorney general — which approved the Tulane hospital transaction in December — LCMC did not need to also submit to a review by the FTC, according to the court ruling.
3. Steward Health Care and HCA
In June 2022, HCA and Dallas-based Steward Health Care System abandoned their proposed deal involving five Utah hospitals. The decision came 13 days after the commission challenged the transaction.
HCA had planned to acquire five Utah hospitals from Steward. Under the proposed acquisition, the hospitals would become part of HCA’s mountain division, which includes 11 hospitals throughout Utah, Idaho and Alaska.
The FTC alleged the acquisition would eliminate the second-and fourth-largest healthcare systems in Utah’s Wasatch Front region, where about 80% of the state’s residents live. By filing suit to challenge the deal, the transaction was halted pending an administrative proceeding with an administrative trial set to begin Dec. 13.
“For the second time in a week, parties who proposed an anticompetitive hospital merger have called their deal off after the FTC filed a complaint to block the deal,” FTC Bureau of Competition Director Holly Vedova said in an agency statement. “This transaction, like the RWJBarnabas Health/Saint Peter’s transaction that was abandoned two days ago, should never have been proposed in the first place. This should be a lesson learned to hospital systems all over the country and their counsel: The FTC will not hesitate to take action in enforcing the antitrust laws to protect healthcare consumers who are faced with unlawful hospital consolidation.”
4. RWJBarnabas Health and Saint Peter’s Healthcare System
In June 2022, two New Jersey systems — New Brunswick-based Saint Peter’s Healthcare System and West Orange-based RWJBarnabas Health — terminated a definitive agreement to merge after the FTC filed a suit to block the transaction.
The FTC alleged the deal would eliminate head-to-head competition between the two systems and raise prices for inpatient general acute care services. The deal would have given the combined health system a market share of about 50% for general acute care services in Middlesex County as a whole, resulting in a presumption of harm under the antitrust laws, according to the agency’s complaint.
“Saint Peter’s University Hospital is less than one mile away from [RWJBarnabas] in New Brunswick, and they are the only two hospitals in that city,” FTC Bureau of Competition Director Holly Vedova said. “There is overwhelming evidence that this acquisition would be bad for patients, because the parties would no longer have to compete to provide the lowest prices and the best quality and service.”
5. Hackensack Meridian Health and Englewood Health
Edison, N.J.-based Hackensack Meridian Health and Englewood Health withdrew their plans to merge in April 2022 after a U.S. appellate court affirmed the order of the district court to block the deal.
The FTC challenged the transaction in 2020, arguing it would give Hackensack Meridian control of three of the six hospitals in Bergen County and raise healthcare costs, according to nj.com. U.S. Circuit Judge D. Michael Fisher agreed the acquisition would raise prices, despite the systems arguing that merging some operations would bring savings.
“We firmly believe this merger was in the best interest of our patients and the community at large,” Hackensack Meridian told Becker’s. “Given the appellate court’s decision, the board and leadership of Hackensack Meridian Health have decided not to pursue the merger.”
6. Care New England and Lifespan
In February 2022, the boards of Lifespan and Care New England — both based in Providence, R.I. — called off plans to merge after the FTC filed a suit with Rhode Island Attorney General Peter Neronha to block the deal. The merger would have given the combined system 80% of the market’s hospital beds and ownership of eight of Rhode Island’s 13 hospitals.
The FTC cited competition concerns in its decision. Rhode Island Attorney General Peter Neronha said the state would join the FTC in the lawsuit, stating the deal would raise healthcare costs.
“If this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their healthcare costs go up for healthcare that is lower in quality and harder to access, and Rhode Island’s healthcare workers would be harmed,” Mr. Neronha said in his decision.