FTC sues to block 2 'anticompetitive' hospital mergers in Utah and New Jersey

Updated June 8, 12:30 p.m.

The Federal Trade Commission is pumping the brakes on a pair of health system merger and acquisition deals in Utah and New Jersey, according to Thursday press releases from the agency.

The first is HCA Healthcare’s proposed purchase of five hospitals from Steward Health Care.

Announced in September 2021, the deal would increase HCA’s Utah presence to seven hospitals and bolster its Mountain Division, which covers Utah, Idaho and Alaska, to 16 hospitals.

The second dates back to a late 2020 integration agreement between New Jersey’s RWJBarnabas Health (RWJBH) and Saint Peter’s Healthcare System.

That arrangement aimed to create what the systems described as “New Jersey’s first multi-campus premier academic medical center,” which would help attract academic talent and research to nearby Rutgers University.

It had picked up the authorization of state regulators just a few weeks ago with a Superior Court judge saying the deal would “serve in the public interest and the public good.”

Federal regulators disagreed, saying in Thursday releases that both deals were anticompetitive and would increase prices and reduce quality of care for patients.

The FTC said HCA and Steward are the second and fourth-largest healthcare systems in Utah’s Wasatch Front region, where 80% of the state’s residents live.

The two companies are “competing vigorously with each other” for inclusion in insurer networks, services, quality and workforce recruitment.

“The result [of their competition] is lower prices and more innovative services for patients and their families,” FTC Bureau of Competition Director Holly Vedova said in a statement. “If these companies merge, this competition will be lost, and Steward will no longer be available to patients as a low-cost provider in this region.”

The FTC also said the acquisition would increase already-high market concentration of inpatient general acute care hospital services.

Nashville, Tennessee-based HCA and Dallas, Texas-based Steward are both for-profit systems active across the country. HCA operates 182 hospitals while Steward controls 41.

The FTC levied similar arguments against the New Jersey deal, as a merger would give the new organization roughly 50% of the market share for general acute care services in the state’s Middlesex County, according to the agency.

"Saint Peter's University Hospital is less than one mile away from [RWJBH] in New Brunswick, and they are the only two hospitals in that city," said FTC Bureau of Competition Director Holly Vedova. “There is overwhelming evidence that this acquisition would be bad for patients because the parties would no longer have to compete to provide the lowest prices and the best quality and service.”

The FTC also noted that the entry of other providers into Middlesex County’s general acute care services market “will not be timely, likely or sufficient to counteract the anticompetitive effects of the acquisition.

West Orange, New Jersey-based RWJBarnabas is a nonprofit operating 12 general acute care hospitals as well as ambulatory surgical centers, a pediatric rehabilitation hospital and a freestanding behavioral health center.

New Brunswick-based St. Peter’s is a Catholic nonprofit headlined by the 478-bed Saint Peter’s University Hospital. It also operates a children’s hospital, primary and specialty care networks and a surgical center.

For both deals, the FTC’s commissioners voted 5-0 to issue an administrative complaint and to authorize agency staff to seek a temporary restraining order and preliminary injunction.

Administrative trials for the HCA-Steward and RWJBH-Saint Peter’s deals are scheduled to begin on Dec. 13 and Nov. 29, respectively.

A Utah judge issued a temporary restraining order on June 6 blocking the HCA-Steward deal. 

In a statement following the FTC's announcements, Steward said it was "deeply disappointed" in the decision and it believed the agency "misread the pro-competitive potential of this transaction and completely ignored the fact that the market is, in fact, dominated by two different major health systems." The system said it will continue to advocate for the transaction and is reviewing its options.