Indiana approves hospital merger, despite FTC objections

Even after federal regulators raised objections, Indiana officials have signed off on Union Health’s acquisition of Terre Haute Regional Hospital.

Indiana Gov. Mike Braun announced Sunday that he was giving his blessing to the merger, saying it’s in the best interest of the Terre Haute area.

“The result of this merger will be lower prices and more healthcare services available to residents of Terre Haute and Vigo County because of the strict operating terms and conditions that Union accepted,” Braun said in a statement. “This will bring long-term improvement to the community’s health outcomes.”

Union Health has been working for years to acquire Terre Haute Regional, a 278-bed hospital which is owned by HCA Healthcare. Union Health, a nonprofit system, operates its main hospital in Terre Haute and a critical access hospital in Clinton, Indiana.

The Indiana Department of Health approved the systems’ application for a Certificate of Public Advantage for a merger. The health department said it would oversee the merger of the two systems.

The Federal Trade Commission has objected to the merger. In March, the commission said it opposed the merger of Union Health and Terre Haute. In its comment letter to Indiana’s health department, the FTC argued that the deal would result in higher prices for consumers, lower wages for workers, and the potential for a decline in health outcomes.

The FTC also voiced its opposition to the deal in September 2024, under President Biden’s administration. With a merger of Union Health and Terre Haute, the combined organization would have 74% of all commercially insured inpatient hospital services in the region, the FTC said.

Facing opposition from regulators and some in the public, Union Health and Terre Haute Regional paused their merger plans last November. But the hospitals filed a revised proposal to come together in February.

Even with the FTC objections, the state can approve the merger through its Certificate of Public Advantage process.

Seeing public benefits

In its letter explaining the decision to support the merger, the Indiana health department said it weighed the comments of the FTC, and also factored in the responses of a town hall on the planned merger in May. The health department said about 63% of the speakers supported the deal, while 25% were opposed and 12% of the comments were neutral.

The Indiana health department also said Union Health agreed to provisions calling for more transparency and accountability. The department said the terms “ensure enforceability, including requiring implementation plans, measurable benchmarks, and comprehensive documentation to demonstrate compliance.”

The health department said the commitments with Union Health would go beyond reducing potential harms and include goals of reducing costs and improving outcomes. The modified terms also call for “an absolute limitation on price,” the department said.

"The Department finds that the aggregate benefits arising from the Proposed Merger, as structured through the commitments and subject to ongoing oversight and regulation by the Department, are sufficient to outweigh the potential disadvantages attributable to a reduction in competition," the health department said.

Steve Holman, president and CEO of Union Health, said the state's approval of the merger is the "right decision and is in the best interest of our community."

"This is an exciting moment for the two health systems, co-workers, patients and the community," Holman said in a statement. "This merger provides more than just the combination of existing resources; it is an opportunity for growth, expanded services and improved health outcomes for those we serve."

Terre Haute Regional Hospital issued a statement of gratitude following the state’s approval of the application.

“We are pleased that Union Health’s Certificate of Public Advantage (COPA) application to acquire Terre Haute Regional Hospital has been approved by the Indiana Department of Health, which will help maintain access to healthcare for residents of the Wabash Valley. We appreciate our colleagues’ patience and continued dedication to serving our patients throughout this process,” the hospital said.

Union Health said it was working to ensure a smooth transition while the deal is finalized. Officials with the hospital did not offer a timetable for the closing of the transaction.

Concerns of cost and quality

Zack Cooper, an associate professor of public health and associate professor of economics at Yale University, has opposed the merger, saying it would result in consumers paying more, while nurses and other staff would earn less.

Even with some revisions to terms and conditions imposed by state officials, Cooper tells Chief Healthcare Executive® that he remains concerned about the deal.

“I think they put in some protections, and we'll see if they work,” he says. “I hope they do. Unequivocally, the protections expire when the COPA expires, so prices are eventually going to go up and … it's going to be a monopoly in a decade.

“If you wanted to lower healthcare costs, this is not what you would do,” Cooper says.

Beyond the cost concerns, Cooper says he’s worried about the possibility that the quality of care provided will be diminished.

“The reason we like competition is because it incentivizes parties to improve their quality,” he says. “This deal gets rid of competition, and it's not entirely clear what the plans are to maintain quality in the absence of competition.”

An attempt for comment from the FTC was unsuccessful. The commission sent an automated message saying it wasn’t able to respond to press inquiries due to the government shutdown.

Indiana state officials say the state has the regulatory authority to approve merger applications through the Certificate of Public Advantage, but federal regulators have faulted that process.

The FTC has argued that state certifications don't allow for sufficient scrutiny, and the FTC has raised objections to other mergers and acquisitions under such certificates in other states.

Indiana Attorney General Todd Rokita spoke out against the deal earlier this year. Rokita argued that someone else would be better suited to acquire the Terre Haute hospital, as opposed to a competitor in the same market.

Read more: After a slow start to the year, hospital merger activity rises