LCMC Health wins court battle with FTC over merger

LCMC Health has secured a victory in its high-profile battle with the Federal Trade Commission.

A federal court ruled in favor of LCMC Health’s acquisition of three hospitals from HCA Healthcare. LCMC announced plans to acquire the hospitals and partner with Tulane University to expand academic medicine and research opportunities in the New Orleans area.

The FTC sought to block LCMC’s acquisition of the hospitals, saying that the Louisiana health system was attempting to skirt federal approval of the deal. LCMC Health argued that it had received the necessary approval from Louisiana state officials.

The U.S. District Court of the Eastern District of Louisiana sided with LCMC Health.

In a ruling issued Sept. 27, U.S. District Judge Lance Africk wrote, “The Court holds that the Hospitals’ transaction is exempt from the federal antitrust laws.”

Greg Feirn, CEO of LCMC Health, welcomed the ruling. The health system was backed by the hospital industry and state officials, who accused the FTC of overstepping its authority.

"We are pleased to announce that the District Court has recognized the value of our partnership with Tulane University and upheld the State of Louisiana's approval,” Feirn said in a statement.

“Earlier this year, LCMC Health and the Attorney General Jeff Landry took a strong stance by taking legal action to safeguard this significant collaboration,” Feirn said. “This partnership underwent a thorough review and approval from the Louisiana Department of Justice, which has been validated by the court’s decision.”

In October 2022, LCMC Health announced it had reached a deal with HCA Healthcare to buy the three hospitals in a $150 million deal. Under the agreement, LCMC acquired Tulane Medical Center, Lakeview Regional Medical Center, and Tulane Lakeside Hospital. LCMC Health says all the employees of the three hospitals will retain their jobs in the merger.

Last fall, LCMC Health and Tulane University also announced plans to expand healthcare options and medical training for doctors and nurses in the region. LCMC Health said it would invest $220 million into upgrades for East Jefferson General Hospital, Lakeview Regional Medical Center, and Tulane Lakeside Hospital.

LCMC Health said it planned to shift most services from Tulane Medical Center to nearby East Jefferson General Hospital and University Medical Center New Orleans over the next 12-24 months. However, LCMC Health said it would maintain a fully operational emergency department at Tulane Medical Center.

Officials said much of the Tulane Medical Center would be repurposed and house a nursing program, research programs and educational space.

With the deal, LCMC Health, a non-profit system, would operate nine hospitals in the New Orleans area. Ochsner Health is the other main provider in the region.

The FTC has been giving more scrutiny to hospital mergers and acquisitions, particularly in deals that involve organizations in the same region. The FTC has objected to a host of planned hospital mergers in the past few years, and some systems have abandoned their consolidation plans in the wake of regulators’ opposition.

Generally, the FTC has opposed state certifications to approve hospital mergers, saying they don’t protect the public interest and shield organizations from antitrust laws.

Hospital groups blasted the FTC for moving to block the LCMC Health’s acquisition. The American Hospital Association, America’s Essential Hospitals, the Federation of America Hospitals and others sent a joint letter to FTC Chairwoman Lina Khan describing regulators’ actions as “an unjustifiable overreach.”

Louisiana’s attorney general also hailed the court’s ruling this week.

In a post on X, the social media platform formerly known as Twitter, Landry said, “I appreciate Judge Africk recognizing that this acquisition is exempt from the Federal Antitrust Laws. His ruling is a victory not only for the rule of law, but also for increased access to quality health care in a community with so many underserved minorities.”

LCMC Health says the merger will help develop a bigger pipeline of nurses and healthcare workers.

Hospital merger activity slowed during the COVID-19 pandemic, but more deals have been taking place in 2023. Analysts say they expect to see more hospital mergers and acquisitions, especially as some smaller organizations may find it difficult to stay afloat without finding a partner.