Supreme Court upholds FTC blockade of Georgia hospital merger

State lawmakers work to rewrite law to avoid ambiguities
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The U.S. Supreme Court on Tuesday upheld the Federal Trade Commission's efforts to block a Georgia hospital merger on antitrust grounds.

In a unanimous decision authored by Justice Sonia Sotomayor, the court agreed with the FTC that the purchase of Palmyra Medical Center by Phoebe Putney Memorial Hospital, the only other hospital in Dougherty County, Ga., would substantially reduce competition for acute-care hospital services. The purchase was handled through the Hospital Authority of Albany-Dougherty County, which owns Phoebe Putney.

The court held that state law "does not clearly articulate and af­firmatively express a state policy empowering the Authority to make acquisitions of existing hospitals that will substantially lessen com­petition." The ruling overturned a decision by 11th U.S. Circuit Court of Appeals upholding the merger.

States in some cases have the authority to conduct business deals that eliminate competition, the Associated Press reports, but "have to explain clearly why competition is not in the public interest and they have to ensure a level of control and oversight of the monopolies."

FTC Chairman Jon Liebowitz issued a statement praising the ruling as "a big victory for consumers who want to see lower health care costs," adding that the opinion "will ensure competition in a variety of other industries, as well." The FTC had contended the lack of competition in Albany could result in higher medical costs for consumers.

The Phoebe Health System issued a statement expressing disappointment in the ruling, saying the "lower court rulings were clear in the applicability of state action immunity in accordance with long-standing precedent."

Earlier this month group of Georgia legislators introduced legislation to rewrite state law to clarify its intent and close the loophole, reports the Albany Herald. HB 30 would clarify that hospital authorities created under state law "are acting pursuant to state policy" and to articulate that "it is and has been, the policy of the State of Georgia that such hospital authorities in the exercise of the powers specifically granted to them in Article 4 of Chapter 7 of Title 31 shall be immune from antitrust liability to the same degree and extent as enjoyed by the State of Georgia," the paper reports.

The Georgia hospital merger was one of four blocked by the FTC in 2012 as violations of federal antitrust laws. The others were ProMedica and St. Luke's Hospital in Ohio, Reading Health System and Surgical Institute of Reading in Pennsylvania, and OSF HealthCare and Rockford Health System in Illinois.

In 2011, the commission challenged 17 of 1,450 proposed healthcare merger transactions.

To learn more:
- download the court decision (.pdf)
- read the Albany Herald article
- here's the AP account
- check out the FTC reaction
- see the hospital system statement

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