Last week, the Supreme Court unanimously voted to block Phoebe Putney Health System's acquisition of former HCA-owned Palmyra Park Hospital, the only competitor in the Albany, Ga., market.
Phoebe Putney is owned by the state's hospital authority, and used state-action to defend its position that the deal is exempt from antitrust review. State-action protects state-owned entities from antitrust review. However, the Federal Trade Commission disagreed, believing the single system would raise healthcare costs; it challenged the consolidation deal.
This is the latest setback for the health systems in a battle that began in 2010. The FTC has maintained the health system would form a monopoly throughout a portion of southwest Georgia. The acquisition deal moved through the legal system, with Georgia's lower courts siding with Phoebe Putney. According to the Supreme Court, the $200 million deal is subject to antitrust review.
This decision is the latest victory for the FTC, which increased the intensity of its antitrust review as the healthcare industry has increased its consolidation efforts. While the FTC has challenged anticompetitive healthcare consolidations in the past, it has never been as effective as now. After the verdict, FTC officials released a statement saying this is a victory for consumers supporting lower cost of care.
Is this really a win for consumers? Some consolidations have increased healthcare prices in communities, but consolidations can also benefit smaller communities and their hospitals. By combining resources, smaller hospitals can better serve the community, as well as adjust to the upcoming changes mandated by the Affordable Care Act.
Phoebe Putney is not giving up its fight against the FTC and continues examining its options in its quest to acquire Palmyra. It looks less likely that Phoebe Putney will be able to complete its acquisition. Meanwhile, with the support of the Supreme Court, the FTC looks to continue challenging consolidation deals that may lessen competition.
For more on the FTC and hospital consolidations, and a deeper look at attempted mergers in two different states, see our Executive Briefing, ?A new, convoluted paradigm emerges as increased consolidations lead to stricter antitrust review?
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