The Federal Trade Commission and North Dakota Attorney General Wayne Stenehjem are asking a federal district court for a temporary restraining order and preliminary injunction to stop a proposed merger involving Sanford Health and Mid Dakota Clinic “until the FTC has completed an administrative hearing that will determine the legality of the transaction and any appropriate remedies,” according to the attorney general’s office.
Parrell Grossman, director of the Attorney General’s Consumer Protection and Antitrust Division, said the merger would lead to a high concentration of the Bismarck-Mandan market. “As a combined entity, Sanford and Mid Dakota Clinic would have an 86-98% share of each of the primary care, pediatrics, OB-GYN and general surgery services market,” Grossman said.
Sanford and Mid Dakota said they are frustrated by the FTC and AG’s opposition to the proposed merger, which was announced last week, arguing the merger would improve care and quality.
Stenehjem said Sanford Health and Mid Dakota Clinic are the two largest providers of adult primary care physician services, pediatric services, OB-GYN services, general surgery, and outpatient surgical services in the Bismarck-Mandan area. He said the two entities “offer a complementary and competitive full range of high-quality medical services.”
Stenehjem said keeping the two separately would maintain consumer choice. “I am concerned the proposed merger might eliminate the significant competition between Sanford and Mid Dakota Clinic, and that the possible results could be lack of choice and higher prices.”
Tad Lipsky, acting director of the FTC’s Bureau of Competition, said, “This merger is likely to reduce significantly the competitive options available to medical insurance providers, which in turn will lead to deteriorating terms for provision of medical care, including higher prices and lower quality. The parties currently compete to join commercial insurers’ provider networks, stimulating each other to improve their technology, expand services, recruit high-quality physicians and provide patients with convenient and accessible physician and surgical services. The transaction would eliminate that competitive pressure."
As merger mania continues to sweep the industry, government officials are watching out for deals that may affect competition. FTC recently was able to help successfully dissolve the potential merger of Advocate Heath Care and Northshore University Health System, which would have created the largest nonprofit health system in Illinois.
Sanford Health is the largest, rural, nonprofit healthcare system in the U.S. with 45 hospitals and 289 clinics in nine states and three countries. It’s also the largest employer in the Dakotas. Sanford Bismarck runs a 217-bed hospital and primary care and specialty clinics. Mid Dakota has 12 facilities in the Bismarck area.