Hospitals plead merger cases despite FTC blockade

The question of whether hospital mergers are anticompetitive is going all the way up to the Supreme Court, as the high court set a Nov. 26 date to hear arguments on the Phoebe Putney Health merger case in Georgia, the Albany Herald reported.

The FTC vs. Phoebe Putney Health System case could reverse decades-old precedent and set a new standard for state-action immunity, according to the Policy and Regulatory Report in The Financial Times.

Phoebe Putney said its use of a hospital authority in the deal shielded the hospital from antitrust enforcement, but the Federal Trade Commission blocked the merger. The FTC in April 2011 filed a complaint, alleging that the proposed merger of Phoebe Putney Health System and Palmyra Park Hospital in Albany, Ga., would raise prices and reduce competition in the area, according to a FTC statement last month.

Meanwhile, the American Hospital Association (AHA) this week filed an amicus brief regarding the proposed merger between ProMedica and St. Luke's Hospital in Ohio, in which it said mergers are the only way for hospitals, particularly stand-alone ones, to stay viable. In the brief filed with the 6th Circuit Court of Appeals in support of ProMedica, AHA appealed FTC's decision, which found the Ohio deal to be anticompetitive.

The association, which represents 5,000 member hospitals, said, "[H]ospitals' ability to compete turns on their ability to keep pace with these trends … requires significant capital investments and economies of scale."

Attorneys at the law firm of Jones Day in Washington, D.C., said hospital mergers can actually improve, rather than reduce, competition among hospitals in a column on Hospital & Health Networks Daily. As AHA noted in its amicus brief, mergers are critical to the future of hospitals and their survival in which economies of scale reduce waste, eliminate duplicative services and distribute the costs over a larger base.

Calling the FTC actions a "dim view of hospital mergers," Toby Singer, Beth Heifetz and Tara Stuckey Morrissey said, "If the FTC blocks beneficial hospital mergers, struggling hospitals may be forced to reduce their staff and services, and they may eventually wind down and close."

For more information:
- read the Albany Herald article  
- see the Policy and Regulatory Report article
- here's the FTC statement
- check out the AHA amicus brief (.pdf)
- see the H&HN Daily column

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