The Federal Trade Commission’s case intending to stop Novant Health from purchasing two hospitals in North Carolina from Community Health Systems turned out to be disadvantageous to the agency. United States District Court Judge Kenneth Bell declined to grant the antitrust agency’s most recent bid for a preliminary injunction against the move.
The FTC initially initiated legal proceedings against the deal in January, arguing that the $320 million price per acquisition would reduce competition in the wider Lake Norman, North Carolina area, hence increasing the price charged to consumers with Novant being awarded almost 65% of the market in inpatient business.
However, the judge decided that the divestiture must proceed as scheduled, arguing that the hospitals would likely shut down if the sale did not occur, which would negatively affect access to care in the region. The judge also noted that the merger had the potential to enhance competition in the region by enabling Novant to compete fairly with the dominant healthcare player in the area, Atrium Health.
The FTC plans to take that ruling to the 4th U.S. Circuit Court of Appeals. The antitrust agency filed its notice of appeal on Sunday and separately on Monday sought an order from a district court to stall the transaction as the case is appealed.
But in the latest effort by the FTC to get Bell to stop the mergers, Bell rejected the request for a preliminary injunction for the reasons that many hospitals would close down.
“If Novant’s not allowed to acquire the hospitals, Davis will shut ‘immediately,’ and certainly before the finish of even an ‘expedited’ appeal (whatever length of time that would take in such a complicated case),” Bell said. “Closing Davis will leave those patients with extremely essential inpatient psychiatric services, causing real harm, not theoretical competitive harm, to numerous patients and their families.”
A temporary restraining order against the deal was granted by Bell to pause the implementation of the decision until June 21 at noon to allow for an appeal to the appellate court. The judgments have been quite unfavorable to the FTC as it tries to step up its efforts to challenge various healthcare transactions.
The agency has recorded some wins in courts and equally registered some losses. In the fiscal year ending June 30, 2014, the FTC, in particular, prevented a takeover by John Muir Health of Tenet Healthcare. But the FTC failed to win a case that was intended to prevent UnitedHealth’s acquisition of Change Healthcare last year at $13 billion, and last month, a federal judge also dismissed the FTC’s healthcare antitrust case against Welsh, Carson, Anderson, and Stowe.
