The Federal Trade Commission, along with the California Attorney General’s office, filed suit to block John Muir Health’s proposed $142.5 million deal to acquire sole ownership of San Ramon Regional Medical Center LLC from current majority owner Tenet Healthcare Corp., saying the deal would boost health care. costs.
The Commission filed an administrative complaint and authorized a lawsuit in federal court alleging that the proposed acquisition would eliminate direct competition between John Muir Health and nearby San Ramon Regional Medical Center. John Muir and San Ramon Medical operate in California’s I-680 corridor, which spans Contra Costa and Alameda counties in the San Francisco Bay area.
The FTC argues that the settlement would allow John Muir to demand higher rates at its two hospitals, as well as at San Ramon Medical, for inpatient general acute care (GAC) services, which are a broad range of medical, surgical, and and essential diagnostic tests that require an overnight stay in the hospital. “Eliminating competition between John Muir and San Ramon Medical would also reduce the incentives for these hospitals to invest in quality improvements,” the FTC said.
“San Ramon Regional Medical Center has played an important role in ensuring that Californians in the I-680 corridor have access to affordable, quality care for critical health care services, such as cardiac surgery and childbirth,” said Henry Liu, director from the FTC Office. of Competition, in a statement. “John Muir’s acquisition of San Ramon Medical would increase already high health care costs in the area and threaten to halt quality improvements that help improve health care for all patients.”
The FTC and the California Attorney General’s office cooperated closely throughout the investigation and will jointly file a complaint in federal district court.
John Muir Health, a nonprofit corporation based in Walnut Creek, California, operates two hospitals providing inpatient GAC services along the I-680 corridor. Dallas-based Tenet operates 61 general acute care hospitals and hundreds of outpatient facilities nationwide, including numerous facilities in California.
Tenet currently operates San Ramon Medical and owns a 51 percent interest in the medical center, while John Muir owns a 49 percent non-operating interest in San Ramon Medical. Under the terms of the proposed deal, John Muir would acquire Tenet’s remaining interest in San Ramon Medical and become its sole owner and operator.
The lawsuit alleges that the proposed deal would allow John Muir to control more than 50 percent of the market for inpatient GAC services sold to commercial insurers and their affiliates in the I-680 corridor, eliminating competition between John Muir and San Ramon Medical.
The FTC said San Ramon Medical is currently a lower-priced competitor seeking to offer inpatient GAC services in the I-680 corridor to enrollees. John Muir Hospitals are close competitors to San Ramon Medical in terms of both patient preference and geographic location, according to the complaint. The FTC argues that the proposed acquisition would result in higher insurance premiums, copays, deductibles and other out-of-pocket costs, or reduced benefits for commercial health insurance enrollees, the complaint alleges.
In addition to filing an administrative complaint, FTC staff will also ask a federal court to issue a temporary restraining order and preliminary injunction to prevent John Muir from taking control of San Ramon Medical pending the agency’s administrative proceeding. .
The Commission’s vote to issue the administrative complaint and authorize staff to seek a temporary restraining order and preliminary injunction was 3-0.
“Today we are in court challenging John Muir Health’s anticompetitive acquisition of San Ramon Regional Medical Center, because when health care markets are illegally consolidated, patients pay the price,” said California Attorney General Rob Bonta , it’s a statement. “At the California Department of Justice, ensuring that all Californians can access quality, affordable health care is a top priority. Competitive markets help keep prices lower. “We will continue to fight to ensure Bay Area residents – and all Californians – can access the affordable health care they need to live healthy, happy lives.”
TO news in the Pleasanton Weekly quotes Mike Thomas, president and CEO of John Muir Health: “We are disappointed by the FTC’s decision and are discussing our options and next steps, including challenging the decision in court. “We believe the proposed acquisition would benefit our community, caregivers and patients, as well as John Muir Health, San Ramon Regional Medical Center and Pleasanton Diagnostic Imaging.”
According to the article, “John Muir officials said the acquisition was set to improve services and patient outcomes by extending existing programs and practices at John Muir to and investing in San Ramon Hospital with the goal of reducing probability that patients need to leave the area to receive care.”
