Dive Brief:
- The Federal Trade Commission sued to block Novant Health’s $320 million acquisition of two North Carolina hospitals from Community Health Systems on Thursday, alleging the deal threatens to raise consumer prices and reduces incentives to provide quality care.
- The antitrust agency said the proposed deal, which was first announced in February of last year, would reduce competition in the region and “increase annual healthcare costs by several million dollars.”
- In response to the lawsuit, a representative from Winston-Salem, North Carolina-based Novant said the nonprofit system would “pursue available legal responses to the FTC’s flawed position.”
Dive Insight:
Novant announced plans to purchase two hospitals in the greater Lake Norman, North Carolina region — Mooresville, North Carolina-based Lake Norman Regional Medical Center and Statesville, North Carolina-based Davis Regional Medical Center — early last year.
Novant is a major player in the region already. It operates Huntersville Medical Center and serves more patients than any other hospital in the Eastern Lake Norman area, according to the FTC.
The deal with CHS would grant Novant control of nearly 65% of the market for inpatient general acute care services in the Eastern Lake Norman area of North Carolina, the FTC concluded upon review.
The Commission voted 3-0 to issue the administrative complaint against Novant and seek a preliminary injunction.
“Hospital consolidations often lead to worse outcomes for nurses and doctors, result in higher prices, and can have life and death consequences for patients,” Henry Liu, director of the FTC’s Bureau of Competition, said in a statement. “There is overwhelming evidence that Novant’s deal with Community Health Systems will be detrimental to patients in the Eastern Lake Norman Area, including leading to higher out-of-pocket costs for critical health care services.”
The lawsuit follows increased scrutiny of hospital mergers and acquisitions from regulators. Last month, the FTC and Department of Justice finalized stricter merger guidelines that are predicted to slow the pace of healthcare dealmaking.
In November, the agency filed suit to block John Muir Health’s proposed $142.5 million deal to buy Tenet Healthcare’s San Ramon Regional Medical Center, alleging the deal would reduce competition in the region. The deal subsequently collapsed in December.
Not all suits have been sucessful. UnitedHealth purchase of Change Healthcare for $13 billion was allowed to go through in 2022 after the DOJ failed to persuade a judge of antitrust concerns.
Editor’s note: This story is developing and will be updated.
