The FTC has vowed to block “bad hospital deals” after it helped steer Fairfield Medical Center in Lancaster, Ohio, away from Columbus-based OhioHealth’s planned purchase and toward a Sept. 1 acquisition by Chillicothe, Ohio-based Adena Health.
A previous FTC staff investigation into OhioHealth’s proposed acquisition of Fairfield Medical highlighted “serious competitive concerns,” including the risk of raising costs and reducing care quality for Ohioans, according to a Sept. 2 news release.
The investigation, which coordinated closely with the Ohio Attorney General’s Office, also raised concerns about Fairfield Medical’s thoroughness in identifying potential buyers.
FTC staff then encouraged the hospital to find alternative buyers in light of the concerns. The sale process attracted multiple potential buyers, which led to Fairfield Medical’s abandonment of the OhioHealth deal in favor of a partnership with Adena Health, the release said.
“Today’s announcement should serve as a reminder that we will stop bad hospital deals,” FTC Bureau of Competition Director Daniel Guarnera said in the release. This matter should also serve as a reminder to firms, including hospitals, that might wish to make a failing firm argument. The standard is demanding, and if you have not searched broadly for a buyer, we will work expeditiously with firms to investigate whether there is a better buyer and, if the Commission deems it necessary, go to court to block a bad deal.”
Following Adena Health’s acquisition, Fairfield Medical Center is now Adena Fairfield Medical Center. It comprises a hospital, two emergency departments and multiple clinics, making it Adena Health’s fifth hospital.
“Although regulatory hurdles created obstacles to our partnership with Fairfield Medical Center, we believe that local access to healthcare is important to every community,” a spokesperson for OhioHealth said in a Sept. 2 statement shared with Becker’s. “We fully support Fairfield’s decision to move forward with another partner and remain appreciative of their collaboration. We wish them and their community continued success and remain committed to our mission of providing healthcare services close to home for patients across the state.”
FTC Chairman Andrew Ferguson, joined by Commissioner Mark Meador, also issued a Sept. 2 statement on best practices for firms “shopping” for a buyer.
The statement detailed what commission staff look for in judging if a hospital’s sales process is adequate: if the seller solicited interest from the full set of potential buyers, if potential buyers were given sufficient time and sufficient, equal access to information to evaluate a deal, if the seller engaged with interested buyers in good faith, and if the seller appropriately considered offers from buyers that did not raise competitive concerns.
“Of course, if a hospital is struggling financially, it may be in the best interests of the hospital’s patients and employees for the hospital to be acquired,” the statement said. “A hospital closure results in fewer healthcare services in the local area that hospital served and provides no competitive constraint on other hospitals. But FMC’s decision to abandon the OhioHealth deal should serve as a reminder that financial distress is not a blank check for mergers that would substantially reduce competition between hospitals and risk leaving patients with higher costs and lower quality care.”
Becker’s has reached out to Adena Health and Fairfield Medical Center for comment and will update this story should more information become available.
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