FTC Reemphasizes Antitrust as NJ and Utah Abandon Proposed Mergers

As reported in our June 13, 2022 blog post, the Federal Trade Commission (FTC) filed complaints on June 2 seeking to block the proposed merger of RWJBarnabas Health and Saint Peter’s Healthcare System in New Jersey and the proposed acquisition of Steward Health Care System by HCA Healthcare in Utah.

On June 14, Holly Vedova, the FTC’s Bureau of Competition Director, issued statements announcing that both mergers have been called off.

In regard to the RWJ/St. Peter’s merger, Director Vedova stated:

“I am glad that rival hospital systems RWJ and Saint Peter’s have terminated an anticompetitive merger that would have harmed patients in Middlesex County, New Jersey. The transaction would have combined two hospitals located less than a mile from each other, which also happen to be the only two hospitals in the city of New Brunswick, New Jersey. With combined shares of approximately 50 percent for inpatient general acute care services in Middlesex County, New Jersey, the transaction was presumptively unlawful and would have resulted in higher prices and lower quality of care for New Jersey residents.”

“I am proud to say that this is the third time the Commission has filed a complaint to block an anticompetitive hospital merger so far in 2022. This enforcement action is a reminder that the FTC remains vigilant in enforcing the antitrust laws and will continue to protect healthcare consumers who are faced with unlawful hospital consolidation.”

In regard to HCA/Steward, Director Vedova stated:

“For the second time in a week, parties who proposed an anticompetitive hospital merger have called their deal off after the FTC filed a complaint to block the deal. This transaction, like the RWJBarnabas Health/Saint Peter’s transaction that was abandoned two days ago, should never have been proposed in the first place. This should be a lesson learned to hospital systems all over the country and their counsel: the FTC will not hesitate to take action in enforcing the antitrust laws to protect healthcare consumers who are faced with unlawful hospital consolidation. Had this transaction been allowed to proceed, it would have combined the second and fourth largest healthcare systems in Salt Lake City and the Wasatch Front region of Utah, resulting in higher prices, less innovation, and lower quality care for patients. I am glad that patients and healthcare providers will not have to endure any more uncertainty while waiting for courts to rule on the FTC’s legal challenges.”

Notably, Director Vedova’s reference to other transactions in 2022 that the FTC successfully sought to block was presumably a reference to the proposed merger in Rhode Island of Lifespan and Care New England Health System which was abandoned in late February.

In that case, both the FTC and the Rhode Island Attorney General challenged the merger asserting that it would have combined the two largest healthcare providers in Rhode Island and created a dominant entity that would have led to higher prices and lower quality care for consumers of health care services in Rhode Island.

The FTC alleged that if the merger was consummated, Lifespan and Care New England would control at least 70 percent of the Rhode Island market for inpatient general acute care hospital services and at least 70 percent of the market for inpatient behavioral health services and that in all these markets the merger would violate Section 7 of the Clayton Act.

The Attorney General in denying the parties’ merger application under the Rhode Island Hospital Conversions Act stated that the new system would:

• Control 75% of all inpatient acute care hospital beds in Rhode Island;
• Control 80% of the Rhode Island market for inpatient hospital care;
• Control 79% of the Rhode Island market for inpatient psychiatric care;
• Control 60% or more of the Rhode Island market for many outpatient surgery specialties;
• Account for 50% of commercial healthcare spending on patients whose primary care physician is part of the merged system’s Accountable Care Organizations; and
• Employ 67% of Rhode Island’s full-time registered nurses working at a hospital.