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Novant scraps $320M hospital deal with CHS

Winston-Salem, N.C.-based Novant Health has called off its planned $320 million acquisition of two North Carolina hospitals from Community Health Systems after an appellate court granted the Federal Trade Commission an emergency injunction blocking the deal. 

In a 2-1 decision, the 4th U.S. Circuit Court of Appeals said it would allow the FTC to prevent the two-hospital acquisition from proceeding until its appeal is resolved.

For more than a year, the FTC has been fighting to block Novant's acquisition of Lake Norman Regional Medical Center and Statesville, N.C.-based Davis Regional Medical Center from Franklin, Tenn.-based CHS, a for-profit health system.

The FTC argues that the transaction would "irreversibly consolidate the market for hospital services in the Eastern Lake Norman Area in the northern suburbs of Charlotte." 

After the latest court ruling, Novant said enough is enough.

"With the FTC's continued roadblocks we do not see a way to finalize this transaction," Novant said in a June 18 statement shared with Becker's. "The communities served by these facilities deserve better than the fate they've been dealt by the FTC so we will look for other ways to support patients and clinicians in these communities."

U.S. Circuit Judge Harvie Wilkinson represented the minority of the 2-1 decision, arguing that the FTC is "acting too aggressively … forgetting there is such a thing as a vibrant private sector."

The district court decision that the FTC successfully appealed found that the proposed acquisition will revitalize Davis Regional and drive competition between Novant and Charlotte, N.C.-based Atrium Health — part of Advocate Health — because it will allow Novant to better compete with Atrium as it expands its presence in the Lake Norman area. 

"The Davis hospital seems on its last legs, and I worry that, as the district court found, its closure may be imminent," Mr. Wilkinson said. "If the proposed transaction were a merger between two behemoths, I would feel differently. But, like the district court, I cannot see how this transaction involving these relatively small facilities would be anticompetitive. Quite the contrary."

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