North Carolina backs FTC bid to block Novant's $320M hospital deal

North Carolina Treasurer Dale Folwell has backed the Federal Trade Commission's bid to block Novant Health's proposed acquisition of two hospitals from Franklin, Tenn.-based Community Health Systems.

In an amicus brief filed April 15, Mr. Folwell said that Novant's $320 million acquisition of Lake Norman Regional Medical Center in Mooresville, N.C., and Davis Regional Medical Center in Statesville, N.C., would eliminate primary competitors and allow the health system to demand more reimbursement from commercial payers. 

"When mergers eliminate competitors (like this one), taxpayers and state employees are forced to subsidize the resulting monopolist's profits," wrote Mr. Folwell, who, as state treasurer, serves as a fiduciary of the North Carolina State Health Plan for Teachers and State Employees. "Hospital systems with a high market share demand greater reimbursement from insurers and third-party administrators, and those costs are ultimately passed along to the plan."

The FTC, in its Jan. 25 complaint, claimed that the proposed acquisition poses a risk of increased prices and diminished incentives for investing in quality and innovative care. The agency also argued that the deal would grant Novant control over almost 65% of the market for inpatient general acute care services in the Eastern Lake Norman area.

With limited alternatives for these services, Novant could raise rates, resulting in increased healthcare costs, the FTC alleged. These elevated costs would be transferred to patients and reduce Novant's incentive to compete for patients through facility improvements, expanded services and enhanced care quality, according to the agency. 

"The FTC's 'one-size-fits-all' attack on hospital mergers, echoed by the amicus brief, misses the real-world facts about this transaction: Novant Health's purchase of these hospitals will ultimately benefit quality of care, long-term outcomes and competition," a spokesperson for Novant told Becker's. "Our commitment to purchase is, fundamentally, a commitment to restore services lost over time and to provide new, leading-edge technology that will enhance the clinical capabilities available to the greater Charlotte community."

An administrative hearing is set for June 26 to determine the legality of Novant's proposed acquisition of the two hospitals.

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