Dive Brief:

• The Federal Trade Commission (FTC) is determined to stop Cabell Huntington Hospital from acquiring rival St. Mary's Medical Center, stating in a complaint the deal would create a "near monopoly" in four West Virginia and Ohio counties for acute-care services and outpatient surgery. The FTC also claimed in a press release the hospitals would own 75% of the market. 
• However, in a joint release issued by the hospitals, both hospital's CEOs emphasized the community benefits of the transaction. Cabell Huntington CEO Kevin Fowler, said the FTC opposition, "misreads the highly competitive landscape" over the hospitals' three-state market of West Virginia, Kentucky, and Ohio. 
• Both hospitals cooperated with the FTC transaction review and provided 340,000 documents. They also agreed to West Virginia Attorney General Patrick Morrisey subjecting them to rate regulation by the West Virginia Health Care Authority for seven years, requiring them to reduce their rates for three years if their combined average operating margin exceeds 4% over a three-year period. 

Dive Insight:

Despite the agreement with the West Virginia Attorney General, the FTC said it, "falls far short of replicating the benefits of competition." Robert Leibenluft, former head of the healthcare division of the FTC and a partner at Hogan Lovells, told Modern Healthcare, "It's very difficult to regulate price in a way that captures what the market might do." 

Massachusetts had a similar scenario in January when Superior Court Judge Janice Sanders rejected Partners HealthCare's potential acquisition of three hospitals under an agreement with the state attorney general that would cap rate increases below the rate of inflation. The FTC has voiced concerns about states moving to grant hospitals exemptions from antitrust enforcement under regulatory supervision called certificates of public advantage, Leibenluft explained.