• Politics
  • Diversity, equity and inclusion
  • Financial Decision Making
  • Telehealth
  • Patient Experience
  • Leadership
  • Point of Care Tools
  • Product Solutions
  • Management
  • Technology
  • Healthcare Transformation
  • Data + Technology
  • Safer Hospitals
  • Business
  • Providers in Practice
  • Mergers and Acquisitions
  • AI & Data Analytics
  • Cybersecurity
  • Interoperability & EHRs
  • Medical Devices
  • Pop Health Tech
  • Precision Medicine
  • Virtual Care
  • Health equity

After FTC opposition, two hospital deals abandoned within days

Article

HCA Healthcare and Steward Health are dropping plans involving the sale of five hospitals, while RWJ Barnabas Health and Saint Peter’s have called off their effort to merge.

The Federal Trade Commission came out against two planned hospital deals this month, and the agency got what it wanted.

Within days, two health system transactions were abandoned after the FTC said it was taking action to stop the deals.

HCA Healthcare had planned to buy five hospitals in Utah from Steward Health, but the systems have dropped their plans to pursue the deal in the face of opposition from regulators.

That news came just days after RWJBarnabas Health and Saint Peter’s Healthcare System said they were ending their plans to merge the two New Jersey systems.

In both planned deals, the FTC said it was seeking to block the transactions because the commission argued patients would see higher prices and reduced services.

After HCA and Steward said they were nixing their plans, FTC Bureau of Competition Director Holly Vedova welcomed the news.

She also made it clear the FTC will move to block other deals that the commission said will reduce competition and higher costs for consumers.

“For the second time in a week, parties who proposed an anticompetitive hospital merger have called their deal off after the FTC filed a complaint to block the deal,” Vedova said in a statement. “This transaction, like the RWJBarnabas Health/Saint Peter’s transaction that was abandoned two days ago, should never have been proposed in the first place.”

“This should be a lesson learned to hospital systems all over the country and their counsel: the FTC will not hesitate to take action in enforcing the antitrust laws to protect healthcare consumers who are faced with unlawful hospital consolidation,” she said.

In the planned HCA-Steward deal, the FTC said it was moving to stop the transaction because it would reduce competition for healthcare services in Utah’s Wasatch Front region, home to 80% of the state’s residents.

The FTC also said the RWJBarnabas and Saint Peter’s planned merger would have hurt competition and prices in Middlesex County, New Jersey.

Barry H. Ostrowsky, chief executive officer of RWJBarnabas Health, said the deal to acquire Saint Peter’s would have led to better services for patients. The two systems had said they hoped to create New Jersey’s first premier academic medical center.

New Jersey state officials had signed off on the planned deal, before the FTC said it would act to block the transaction.

“We are disappointed in the termination of the proposed transaction, which we believe would have transformed quality, increased access and decreased the overall cost of care for the people of this state through the creation of a premier academic medical center,” Ostrowsky said in a statement.

President Biden’s administration has directed regulators to give more scrutiny to planned hospital mergers.

In July 2021, Biden issued an executive order directing federal agencies to look closely at healthcare consolidations, including hospital deals, to promote competition and help protect against higher costs, reduced services and lower wages.

“Hospital consolidation has left many areas, especially rural communities, without good options for convenient and affordable healthcare service,” the White House said last summer. “Thanks to unchecked mergers, the ten largest healthcare systems now control a quarter of the market.”

In February, the FTC also came out against the planned merger of Care New England and Lifespan, Rhode Island’s two biggest healthcare providers. Rhode Island Attorney General Peter Neronha also opposed the deal, and the two systems dropped their plans.

Nonetheless, Care New England is still looking for another merger partner.

The first quarter of 2022 proved to be quiet for hospital mergers, with analysts saying the spike in COVID-19 cases and hospitalizations probably diverted attention from making deals.

However, analysts project more hospital mergers and acquisitions to take place later this year. Many hospitals, particularly smaller hospitals and systems, have been struggling financially and they may need to find partners to survive, analysts say.

Atrium Health and Advocate Aurora Health announced plans in May to merge and create a unified system with $27 billion in annual revenue. The merged company would operate 67 hospitals and would employ nearly 150,000 workers.

The two systems don’t operate in overlapping markets, avoiding one problem that has drawn the concern of regulators examining other deals. Atrium Health, based in Charlotte, N.C., serves North Carolina, South Carolina, Georgia, and Alabama, while Advocate Aurora operates in Illinois and Wisconsin.

If regulators approve the Atrium and Advocate Aurora merger, analysts have said it could prompt other systems to consider similar deals.


Recent Videos
Image: Ron Southwick, Chief Healthcare Executive
Image: U.S. Dept. of Health & Human Services
Image: Johns Hopkins Medicine
Image credit: ©Shevchukandrey - stock.adobe.com
Image: Ron Southwick, Chief Healthcare Executive
Image credit: HIMSS
Related Content
© 2024 MJH Life Sciences

All rights reserved.