Fitch: Supreme Court merger ruling could hurt for-profit hospitals

Fitch Ratings warns the recent U.S. Supreme Court ruling that struck down the merger of two Georgia hospitals could negatively affect the finances of investor-owned healthcare organizations.

"[S]tricter anti-trust action is a negative for investor owned hospitals as these companies have recently been offsetting weak organic growth through hospital acquisitions," the rating agency said Thursday in a brief report.

Fitch also acknowledged the Federal Trade Commission is taking a tougher stance on hospital competition, which could influence payment rates from insurers. "Simply put, less industry consolidation means decreased pricing power for hospitals," Fitch said.

The Supreme Court last week upheld ethe FTC's attempt to block the purchase of Palmyra Medical Center by Phoebe Putney Memorial Hospital, the only two acute care operators in Albany, Ga.

The deal was being abetted by the local public hospital authority, which owns both hospitals but leases them out to private operators. The high court had ruled that although some monopolies may be created, it must be shown why it is not in the best interest of the public--a burden that was not met in this case, according to the Associated Press.

The FTC called the ruling "a big victory for consumers who want to see lower healthcare costs," Chairman Jon Leibowit said in a statement. That reaction tends to reinforce Fitch's concerns, as lower costs are presumably the consequence of decreased leverage by hospital operators to set prices.

For more:
- check out the Fitch Ratings report
- read the Associated Press article
- here's the FTC statement