The Federal Trade Commission continues to closely examine health system mergers. In its most recent action, it filed suit to block Novant Health, Inc.’s $320 million acquisition of two North Carolina hospitals from Community Health Systems Inc. (CHS).
The FTC issued an administrative complaint and authorized a lawsuit in federal court to block the proposed acquisition, alleging that Novant Health’s proposed deal to acquire Lake Norman Regional Medical Center and Davis Regional Medical Center from CHS threatens to raise prices and reduce costs. incentives to invest in quality. and innovative care that would benefit patients.
“Hospital consolidations often lead to worse outcomes for nurses and doctors, result in higher prices, and can have life-or-death consequences for patients,” Henry Liu, director of the FTC’s Bureau of Competition, said in a statement. . “There is overwhelming evidence that Novant’s agreement with Community Health Systems will be detrimental to patients in the eastern Lake Norman area, including resulting in higher out-of-pocket costs for critical healthcare services.”
The FTC notes that Novant operates Huntersville Medical Center and serves more patients than any other hospital in the eastern Lake Norman area. Novant is one of the largest hospital systems in the southeastern United States, including North Carolina. It is also one of the most expensive hospital systems in North Carolina, according to the FTC administrative complaint.
Under the proposed deal, Novant would acquire Lake Norman Regional Medical Center, which is located 11 miles from Novant’s Huntersville Medical Center. Additionally, Novant would acquire other related assets of CHS, including Davis Regional Medical Center (a behavioral health hospital), a medical group of 24 physicians employed by Lake Norman Regional Medical Center, a majority interest in an endoscopy center in Mooresville and a holding entity. a certificate of need from North Carolina to construct an ambulatory surgery center in Mooresville.
The FTC alleges that the proposed agreement with CHS would allow Novant to control nearly 65 percent of the general acute care inpatient (“GAC”) services market in the eastern Lake Norman area of North Carolina, which primarily includes the Iredell County and northern Mecklenburg County. . GAC inpatient services include a wide range of essential medical, surgical and diagnostic services that require an overnight stay in the hospital.
With fewer alternatives for inpatient GAC services, Novant could demand higher rates for its services, the FTC said. The FTC alleges that the proposed acquisition would likely increase annual healthcare costs by several million dollars. These higher costs would then be passed on to patients. The deal would also reduce Novant’s incentive to compete to attract patients by improving its facilities, service offerings and quality of care.
The FTC vote to issue the administrative complaint and authorize staff to seek a temporary restraining order and preliminary injunction was 3-0. The federal court complaint and request for preliminary relief will be filed in the United States District Court for the Western District of North Carolina to halt the transaction pending an administrative proceeding.
In November 2023, the FTC, 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 the current owner majority Tenet Healthcare Corp., saying the deal would increase health care costs.
The FTC alleged 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 hospital stay. “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.
