Dive Brief:
- In responses to a lower court decision that it violated antitrust laws in its acquisition of a hospital four years ago, Ohio health system ProMedica has appealed to the US Supreme Court.
- ProMedica filed a petition with the US Supreme Court in late December, and has asked the court to hear the case. A conference has not yet been scheduled.
- In April, a three-judge panel of the 6th US Circuit Court of Appeals in Cincinnati ruled in favor of the Federal Trade Commission and ordered ProMedica to divest St. Luke's Hospital in Maumee, Ohio.
Dive Insight:
This has been a lengthy court battle for ProMedica. The three-hospital system closed its deal with St. Luke's but, under an agreement with FTC, didn't integrate certain parts of the business. After FTC won a preliminary injunction halting further integration, and won an administrative trial and appeal, ProMedica appealed to the Sixth Circuit and lost. In defining "relevant service market," FTC typically clusters inpatient services. But in ProMedica's case FTC separated out obstetrical services, noting the merged entities' OB services would comprise 81% of the market, and their general acute-care services, 58%.
With so many mergers and acquisitions these days, antitrust violations are a big concern among regulators, who fear that consumers will pay the price when there's less competition. The FTC has been increasingly successful in its efforts to block deals which it sees as anticompetitive. For example, it won three cases regarding hospital mergers in the last two years: This one, and ones in Albany, GA and Rockford, IL. It also just prevailed in its first ever case challenging a health system buyout of a medical practice in Idaho.
The ProMedica case, in particular, exemplifies the new reality for M&A activities, as a growing number of health networks look to expand in order to improve efficiencies. Health networks must exercise extra due diligence when looking at potential partnerships.
