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FTC sues to stop Methodist Le Bonheur's acquisition of 2 hospitals

The Federal Trade Commission filed a complaint Nov. 12 to block Memphis, Tenn.-based Methodist Le Bonheur Healthcare's $350 million acquisition of two hospitals from Tenet Healthcare Corp.

Methodist Le Bonheur entered a definitive agreement with Dallas-based Tenet in December 2019 to acquire Saint Francis Hospital-Bartlett (Tenn.) and Saint Francis Hospital-Memphis. Tenet agreed to sell the hospitals and other assets for $350 million in cash, and system officials expected the transaction to close in 2020, pending regulatory approvals.

In its complaint, the FTC alleges that Methodist Le Bonheur's proposed acquisition of the two Memphis-area hospitals would leave the system controlling more than 50 percent of the inpatient general acute care services in the Memphis area. Four hospital systems currently provide general acute care services in the Memphis area, and the complaint alleges that the proposed deal would reduce that number to three.

The FTC also claims the transaction would eliminate the "head-to-head competition" that Methodist Le Bonheur and Saint Francis share as they monitor one another's quality scores and brand recognition, vie with one another for inclusion in insurer networks, and compete for points of access and in physician recruitment. The FTC contends that this level of competition incentivizes the parties to keep prices lower and quality of care higher than they would without it.

The commissioners' vote to issue the administrative complaint was 5-0. The FTC will also seek a temporary restraining order and preliminary injunction to stop the transaction pending an administrative trial, which is scheduled to begin May 18, 2021.

Sally Hurt-Deitch, CEO of Saint Francis Healthcare, and Michael Ugwueke, president and CEO of Methodist Le Bonheur, shared the following joint statement with Becker's

"Our joint commitment has always been to improve healthcare delivery for the residents of Memphis, Bartlett and the surrounding communities, including enhancing access to care, cutting-edge medical technology and the highest quality physicians and staff. Our two organizations promote a culture of compassion backed by strong core values, which together, we believe will have an even greater impact on care delivered in these communities. 

We are reviewing this recent action by the FTC and actively considering next steps. 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."

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