FTC was investigating merger of Atrium Navicent, Houston Healthcare before collapse of deal

Mergers and acquisitions deals consolidation
The FTC announced it was investigating a proposed merger between Atrium Navicent and Houston Healthcare before the deal collapsed late last month. (Getty/Kritchanut)

The Federal Trade Commission was investigating a proposed merger between Atrium Health Navicent and Houston Healthcare System, which was called off late last month.

The agency disclosed that it was investigating the deal between two Georgia systems and had determined that it would have harmed prices and quality had the merger gone through. The investigation, which is now closed, is the latest by the agency into hospital deals.

“The proposed transaction threatened to increase healthcare costs for employers and patients in the region and would have substantially lessened competition that has benefitted the community through expansion of healthcare services and improved quality of care,” said FTC Acting Chairwoman Rebecca Slaughter in a statement on Wednesday.

The healthcare systems said in a joint statement that the agency's investigation wasn't the reason for nixing the merger. 

"The yearlong impact of the unforeseen COVID-19 pandemic caused both organizations to reevaluate the parameters of the agreement, and we agreed it was in both of our interests to step away from the combination process," according to a statement to Fierce Healthcare.

The FTC’s staff had recommended that the agency challenge the merger after the investigation uncovered evidence that that “competition to improve quality of patient care, invest in facilities and technologies and expand access to healthcare services would be harmed by the merger,” according to a release.

This is the latest move by FTC to crack down on hospital mergers.

Methodist Le Bonheur stopped a bid to buy two Tenet-owned hospitals in the Memphis area after the FTC sued to halt the deal.

But the FTC was unable to block Thomas Jefferson University’s bid to acquire Albert Einstein Healthcare Network. A federal judge struck down the agency’s lawsuit seeking to end the deal last December.

Hospital deals also likely will not be the only ones to face more scrutiny. FTC announced in January that it plans to study the impact of physician group and healthcare facility consolidation over the past six years to determine how such deals affect competition.