Court rules ProMedica must dissolve Ohio hospital merger

A federal court this week denied ProMedica Health System's petition to overturn a 2011 ruling by the Federal Trade Commission (FTC) prohibiting a merger with St. Luke's Hospital in Ohio.

In 2011, the FTC challenged ProMedica's 2010 merger with St. Luke's Hospital in Maumee, Ohio, arguing that it would create market dominance and stifle competition. Later that year, an administrative judge ruled in favor of the FTC's preliminary injunction. "This action by the FTC is inconsistent with the integration and coordination that healthcare reform both encourages and requires," ProMedica said in a statement in response to the ruling.

The 6th Circuit Court of Appeals in Cincinnati Tuesday, in a unanimous opinion, agreed with the FTC's ruling that the merger would be anti-competitive and illegal. As ProMedica already had a 46.8 percent market share in Lucas County, Ohio prior to the merger, it was already the "dominant" system, Circuit Judge Raymond M. Kethledge said in his ruling. If the system added St. Luke's, an independent non-profit hospital which had 11.5 percent of the market before the merger, it would cause  "a tremendous increase in concentration in a market that already was highly concentrated and the merger would make ProMedica dominate in southwest Lucas County."

The merger, Kethledge ruled, gives the system an excessive amount of bargaining power to set reimbursement rates with health insurers.

FTC Chairwoman Edith Ramirez called the ruling a victory for residents of Lucas County, Ohio. "As this decision demonstrates, the FTC's vigilant enforcement of the antitrust laws in healthcare provider markets helps deliver lower cost, higher quality healthcare to consumers," she said.

ProMedica intends to appeal the decision, the system said in a statement to the media. "In the meantime, we would like to emphasize that St. Luke's Hospital remains a member of ProMedica. St Luke's will continue to operate as normal as we pursue additional legal options. We will continue to serve patients and all health plans currently accepted at St. Luke's will continue to be accepted," the statement notes. 

In June 2012, after the initial FTC injunction, ProMedica announced an agreement to form a long-term relationship with Memorial Hospital in Fremont, FierceHealthcare previously reported.  

To learn more:
- read the ruling (.pdf)
- here's the ProMedica statement
- here's the FTC statement