- State University of New York Upstate Medical University and Crouse Health System are abandoning their plans to merge. The two plan to pull an application seeking approval from state regulators to shield the deal from federal antitrust enforcement.
- The Federal Trade Commission, which opposed the tie-up, cheered the news on Thursday. The FTC has been opposed to Certificates of Public Advantage, or COPAs, that allow anticompetitive mergers between hospitals.
- “It is very good news for patients and healthcare workers in upstate New York that this proposed merger is not going to happen,” Elizabeth Wilkins, director of the FTC’s office of policy planning, said in a statement.
The FTC has previously warned state lawmakers about the dangers of shielding hospital mergers from antitrust enforcement.
In some cases, merging hospitals seek to gain a COPA, a mechanism that insulates the deal from antitrust oversight in exchange for prolonged state oversight.
In a report released in August last year, the FTC said that COPA arrangements result in higher healthcare prices and lower quality of care while also depressing wages for employees, especially nurses.
The FTC submitted an 88-page report in October to the New York State Department of Health — which was charged with reviewing the COPA application — urging state regulators to oppose the deal.
In the report, the FTC said SUNY and Crouse are close competitors and that regulatory state conditions would probably not mitigate the harms to patients, employers and employees.
“There is not sufficient evidence to conclude that the potential harms are likely to be outweighed by the potential benefits of the merger,” the FTC said in the report.
Competition between the two systems benefits patients and employers in the area through lower costs and better quality, the FTC said. Post merger, the two would have a combined market share of 45% of commercially insured inpatient hospital services.
And in Onondaga County, which includes Syracuse, the effects would be felt “most acutely by patients” because the two would have a “combined share of nearly 67% of commercially insured inpatient hospital services,” the FTC said.
In a combined statement to Healthcare Dive, the two systems called the acquisition "impractical" at this time.
“This is not the outcome we anticipated when we started down this road, but it is the prudent decision at this time and is a result of the economic and operational headwinds health care is facing, not just here in Syracuse, but nationwide,” said SUNY President Mantosh Dewan in the statement.
Going forward, SUNY Upstate Medical University and Crouse will work together through an affiliation agreement but remain separate entities.