Prisma Health and LifePoint Health have nixed a transaction involving three South Carolina hospitals and a free-standing emergency room due to resistance from federal and state regulators, the companies announced Friday.
First announced in March 2020, the deal would have seen Prisma Health–Midlands acquire KershawHealth in Camden, South Carolina; Providence Health and Providence Health Northeast in Columbia, South Carolina; and the ER located in South Carolina’s Fairfield County. Together, the facilities employ more than 2,300 dedicated staff, according to the initial announcement.
With the deal closed and the facilities integrated, Prisma Health would have become the sole provider of hospital-based acute care services in four South Carolina counties.
However, the acquisition was challenged in court shortly after the announcement by county officials and Lexington Medical Center, a competing local provider. A judge ruled against the deal in late 2020, with Prisma Health filing unsuccessful appeals through the months to follow.
Prisma Health and LifePoint Health’s decision to terminate the transaction was tied to these regulatory hurdles.
“While both parties anticipated that the acquisition would have a complex regulatory path, significant delays and challenges with the Federal Trade Commission and state regulatory authorities have made it prohibitive to move forward,” Prisma Health said in a statement.
Prisma Health is a not-for-profit healthcare system formed by the merger of South Carolina’s Greenville Health System and Palmetto Health in 2017. With 18 hospitals and more than 300 outpatient sites, the company says it staffs nearly 30,000 employees and serves over 1.2 million patients each year.
LifePoint Health, a private for-profit company, owns and operates healthcare facilities across the country. As of its merger with RCCH Healthcare Partners in 2018, it claimed to operate 89 hospital campuses across 30 states.
Prisma Health and LifePoint Health’s ill-fated agreement aside, merger and acquisition deals between hospitals and health systems have soldiered on during the COVID-19 pandemic.
A Kaufman Hall report on 2020 merger and acquisition activity outlined 79 deals between hospitals and health systems. More recently, the firm noted a major dip to just 12 transactions in the first quarter of 2021 (compared to the first quarter of 2020’s 30), although the average size of those deals increased substantially.
Both reports cited revenue diversity and local market knowledge as major trends driving mergers and acquisitions over the past several months.
With that being said, healthcare consolidation over the last few years has raised some warning flags among regulators. Earlier this year the Federal Trade Commission kicked off a probe investigating the impact these mergers have on their surrounding competition.