The U.S. Federal Trade Commission (FTC) has intervened in a proposed merger of two rural Appalachian hospitals, claiming it would create monopoly-like conditions for the region.
The FTC has issued an administrative complaint against 303-bed Cabell Huntington Hospital's (CHH) proposed purchase of 393-bed St. Mary's Medical Center (SMMC). They are both three miles apart in Huntington, West Virginia, on the border with both Ohio and Kentucky. It is also seeking an injunction and a restraining order against the transaction.
"If this proposed acquisition goes forward, it would eliminate important competition that has yielded tremendous benefits for Huntington-area residents," said Steve Weissman, deputy director of the FTC's bureau of competition, in a statement. "The merged hospitals would have a market share of more than 75 percent, and local employers and residents are likely to face higher prices and reduced quality and service at the combined hospital."
The chief executive officer of CHH strongly disagreed with that assessment.
"It is our opinion that the FTC's action...misreads the highly competitive landscape in our Tri-State region and overlooks the enormous community benefits that would result from the combination of CHH and SMMC," Kevin Fowler told MetroNews in a statement. "Despite the FTC's decision, we remain committed to this acquisition as we believe it assures quality medical care for the residents of our region."
The deal was initially announced a year ago. State regulators signed off on the deal, so long as SMMC was kept a freestanding facility and charges were kept below certain thresholds.
The FTC intervened recently to strike down a deal involving ProMedica's acquisition of St. Luke's Hospital in Maumee, Ohio, about 250 miles north of Huntington. A leading antitrust attorney told Fierce that the FTC's strategy is to try and unwind deals that have been consummated or are about to be completed.
However, most of the FTC's activity has been in rural areas, even as experts have warned that ongoing merger activity among hospitals and healthcare systems could create a "too big to fail" scenario for many acute care providers.