FTC challenges Sanford Health's acquisition of North Dakota clinic: 8 things to know

The Federal Trade Commission and North Dakota's Office of the Attorney General jointly filed a complaint Thursday to block Sanford Health's proposed acquisition of a 61-physician clinic in Bismarck, N.D.

Here are eight things to know about the FTC's latest healthcare challenge.

1. Sioux Falls, S.D.-based Sanford Health announced its proposed acquisition of Mid Dakota Clinic on Wednesday. The parties aimed to close the acquisition, pending regulatory approval, July 1.

2. The FTC and North Dakota AG are seeking a temporary restraining order and preliminary injunction to halt the deal pending an administrative trial, which is set to begin Nov. 28.

3. Sanford Health includes 45 hospitals and 289 clinics across nine states and three countries. In the Bismarck area, specifically, Sanford Bismarck operates a 217-bed acute care hospital and a network of primary care and specialty clinics, employing 160 physicians and 100 non-physician healthcare providers. Mid Dakota Clinic operates 12 sites of care in the Bismarck area. The FTC claims it employs 61 physicians and 19 advanced practice practitioners, whereas Mid Dakota's website states it includes "a comprehensive staff of more than 90 doctors and practitioners."

4. The commission and AG claim Sanford and Mid Dakota are each other's closest rivals in a four-county region of North Dakota with a population of 125,000. The complaint alleges the transaction would create a group of physicians with at least 75 to 85 percent share in the provision of adult primary care physician services, pediatric services and obstetrics and gynecology services.

5. "This merger is likely to reduce significantly the competitive options available to medical insurance providers, which in turn will lead to deteriorating terms for provision of medical care, including higher prices and lower quality," said Tad Lipsky, acting director of the FTC's Bureau of Competition. "The parties currently compete to join commercial insurers' provider networks, stimulating each other to improve their technology, expand services, recruit high-quality physicians and provide patients with convenient and accessible physician and surgical services. The transaction would eliminate that competitive pressure."

6. Mid Dakota originally entered into negotiations with CHI St. Alexius Health, also in Bismarck, more than a year ago. However, CHI St. Alexius ended the discussions for undisclosed reasons. Once the deal fell through, Mid Dakota reached out to Sanford and began negotiations in fall 2016.

7. When rolling out the deal Wednesday, Sanford and Mid Dakota officials said it will allow the organizations to increase the number of services they offer without affecting patient care. They did not expect any staff cuts as a result of the merger.

8. In a statement, Sanford said both organizations find news of the FTC and North Dakota AG's complaint extremely frustrating and believe the FTC and AG have their facts and legal arguments wrong given the "national, legal and economic experts" that Sanford and Mid Dakota tapped to evaluate "all aspects of the partnership."

"The best way to describe our reaction is that we are exasperated with the delay that the FTC's inquiry has already caused, and that these proceedings will continue to cause," said Shelly Seifert, MD, Mid Dakota Clinic Board Chair. "It is very disappointing because patients rely on us to continually look for ways to enhance care, improve quality and expand service and access for them and their families. That's exactly what this merger does."

 

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