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FTC sues to block $320M Novant, CHS deal

The Federal Trade Commission said it is suing Winston-Salem, N.C.-based Novant Health in a move to block its $320 million acquisition of two North Carolina hospitals from Franklin, Tenn.-based Community Health Systems. 

The FTC is pursuing a lawsuit in federal court that aims to block the pending acquisition of Mooresville, N.C.-based Lake Norman Regional Medical Center and Statesville, N.C.-based Davis Regional Medical Center from Community Health Systems, according to a Jan. 25 news release from the FTC. 

The FTC claims that Novant's proposed agreement to acquire the two hospitals from Community Health Systems poses a risk of increased prices and diminished incentives for investing in quality and innovative care.

"Hospital consolidations often lead to worse outcomes for nurses and doctors, result in higher prices, and can have life and death consequences for patients," Henry Liu, director of the FTC's Bureau of Competition, said in the release. "There is overwhelming evidence that Novant's deal with Community Health Systems will be detrimental to patients in the Eastern Lake Norman Area, including leading to higher out-of-pocket costs for critical health care services."

The FTC argued that the proposed agreement between Novant and CHS would grant Novant control over nearly 65% of the market for inpatient general acute care services in the Eastern Lake Norman area of North Carolina. 

With limited alternatives for these services, Novant could raise rates, leading to increased annual healthcare costs by several million dollars, the FTC alleged. These elevated costs would be transferred to patients and would diminish Novant's incentive to compete for patients through facility improvements, expanded services and enhanced quality of care, according to the FTC.

"As a nationally recognized leader in quality and patient safety, Novant Health is committed to delivering the highest-quality, patient-centered, physician-directed care to the communities served by Lake Norman and Davis Regional Medical Centers," a Novant spokesperson told Becker's. "As we keep that commitment across North Carolina, including throughout the Greater Charlotte area, we will pursue available legal responses to the FTC's flawed position announced today. We remain confident that Novant Health can bring exceptional care, leading-edge innovation, and long-term stability to Lake Norman and Davis Regional Medical Centers." 

The deal between Novant and Community Health Systems was first announced in March 2023.

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