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5 hospital deals challenged by the federal government in 2020

Several potential hospital mergers have been challenged by the Federal Trade Commission or U.S. Justice Department this year.

Below are five of them:  

1. Hackensack Meridian Health, Englewood Health

The FTC will sue to block Edison, N.J.-based Hackensack Meridian Health's acquisition of Englewood (N.J.) Health. 

The FTC said that combining the two organizations would reduce competition in Bergen County, N.J., as they would own half of the six acute care hospitals in the county. The agency said this reduced competition would likely lead to higher prices.

The FTC filed an administrative complaint Dec. 3 and plans to file a lawsuit in the U.S. District Court for the District of New Jersey to halt the transaction. The administrative trial is scheduled for June 15, 2021.

"We are very disappointed to learn that the Federal Trade Commission has voted to challenge the proposed merger between Hackensack Meridian Health and Englewood Health," a joint statement from Hackensack Meridian Health and Englewood Health reads. "We continue to firmly believe that this merger is in the best interest of our patients and the communities at large. As a result, we plan to vigorously defend the merger in court." 

2. Methodist Le Bonheur Healthcare, Tenet Healthcare

The FTC filed a complaint to block Memphis, Tenn.-based Methodist Le Bonheur Healthcare's $350 million acquisition of two hospitals from Dallas-based Tenet Healthcare. The two hospitals are Saint Francis Hospital-Bartlett (Tenn.) and Saint Francis Hospital-Memphis.

The FTC alleges that Methodist Le Bonheur's proposed acquisition of the two hospitals would leave the system controlling more than 50 percent of the inpatient general acute care services in the Memphis area. The FTC also claims the transaction would eliminate the "head-to-head competition" that Methodist Le Bonheur and Saint Francis share.

The FTC complaint, filed Nov. 12, seeks a temporary restraining order and preliminary injunction to stop the transaction pending an administrative trial slated to begin May 18, 2021. 

"We are surprised by the FTC action given the strong support for the transaction by local stakeholders, including leading local health plans, physicians, employers and community leaders, and the evidence that the transaction will lead to lower prices, improved quality and enhanced access to care for Memphis area patients," Sally Hurt-Deitch, CEO of Saint Francis Healthcare, and Michael Ugwueke, president and CEO of Methodist Le Bonheur, said in a joint statement.

The organizations have since called off the deal. The deal was called off less than two months after the FTC filed its complaint

3. Jefferson Health, Einstein Healthcare 

The FTC sued to block the merger of Philadelphia-based Jefferson Health and Einstein Healthcare Network, a deal that has been pending since 2018.

In the complaint, filed Feb. 27, the FTC said that the combination of the two systems would reduce competition in both Philadelphia and Montgomery counties. 

"Jefferson and Einstein have a history of competing against each other to improve quality and service," the FTC said. "The proposed merger would eliminate the robust competition between Jefferson and Einstein for inclusion in health insurance companies’ hospital networks to the detriment of patients."

Einstein and Jefferson Health countered that a combined system still would face competition from other hospitals and operate in a challenging market dominated by one healthcare insurer.

A Pennsylvania federal court Dec. 8 rejected the FTC's bid to block the merger.

4. Geisinger, Evangelical Community Hospital 

The U.S. Justice Department sued to block Danville, Pa-based Geisinger's partial acquisition of Evangelical Community Hospital, a 132-bed hospital in Lewisburg, Pa. 

In the antitrust suit, filed Aug. 5, prosecutors said Geisinger and Evangelical are close competitors for inpatient acute care for patients in six counties in Pennsylvania.  As a result, Geisinger's plan to acquire a 30 percent ownership stake in the hospital would "fundamentally" alter the relationship between the two organizations and reduce incentives to "compete aggressively against each other," the complaint reads.

"We are disappointed by the decision and continue to believe enhancing our relationship with Geisinger is in the best interest of the region and will provide efficient, cost-effective healthcare to the communities we serve," said Kendra Aucker, president and CEO of Evangelical Community Hospital. 

The case has not been heard by a judge.

5. Community Health Systems, Hendrick Health System, Shannon Health System

The FTC urged Texas regulators to block Franklin, Tenn.-based Community Health Systems' planned divestiture of two hospitals in the state. 

In April, CHS announced its intent to sell the 231-bed Abilene (Texas) Regional Medical Center to Abilene-based Hendrick Health System and its 171-bed San Angelo (Texas) Community Medical Center to Shannon Health System in San Angelo. 

The Texas Health and Human Services Commission ultimately has final say on approving or blocking the proposed transactions because Texas implemented a law that shields the deals from federal oversight in exchange for state oversight.

In a letter to the Texas commission, the FTC argued that if the deals are allowed to move forward, the combinations would remove competition in the markets, resulting in higher prices and harming consumers.

The sale of both hospitals was approved by Texas regulators in early October, despite objection from the FTC.

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