FTC celebrates after SUNY Upstate, Crouse Health System scrap merger plans

SUNY Upstate Medical University and Crouse Health have settled for a “strategic affiliation agreement” after initially announcing merger plans that drew the ire of federal regulators.

The New York providers shared Thursday that they have withdrawn applications for a Certificate of Need (CON) and a Certificate of Public Advantage (COPA), which would have been necessary to receive approval from the state for a merger. Each organization will continue to operate as separate and independent entities.

Rather, the providers said they have reached an agreement that will “allow for future collaboration on programs to improve access to care and enhance quality for our patients.” These could include joint initiatives on patient services, educational programs for providers and cost reduction, they said.

“This is not the outcome we anticipated when we started down this road, but it is the prudent decision at this time and is a result of the economic and operational headwinds health care is facing, not just here in Syracuse, but nationwide,” Upstate President Mantosh Dewan, M.D., said in the announcement.

“Should circumstances sufficiently change moving forward, we will consider revising and resubmitting applications for a CON and COPA that would authorize Crouse Health to become a division of SUNY Upstate Medical University. In the meantime, we look forward to working with Crouse under the affiliation agreement.”

The systems announced their merger proposal back in April 2021. The deal would have created a system of more than 13,000 employees and 1,200 licensed inpatient beds.

In October, however, the Federal Trade Commission (FTC) filed an 88-page public comment with the New York State Department of Health that argued Upstate and Crouse’s merger would likely drive higher costs, reduce care quality, lower access to care and reduce bargaining power for hospital workers.

In a Thursday statement, Elizabeth Wilkins, director of the FTC’s Office of Policy Planning, celebrated news of the merger’s demise.

“It is very good news for patients and healthcare workers in upstate New York that this proposed merger is not going to happen,” she said in the statement. “FTC staff had an active investigation into the effects of the proposed merger. … The merged entity would have had a combined share of nearly 67% of commercially insured inpatient hospital services in Onondaga County, and the proposed merger would have reduced the number of hospital options available for nearly all patients from three to two.”

Upstate and Crouse still affirmed in their statement that a merger would bring benefits around care delivery, access and clinical training, but said that withdrawing the applications was “appropriate” at this time.

The decision marks a win in the FTC’s recent campaign against hospital consolidation and, more specifically, mergers approved by states with COPA legislation. These agreements often bring few of the promised benefits to their markets and should be considered with greater scrutiny, the FTC has argued.