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FTC v. Phoebe Putney: The next big Supreme Court case for hospitals?

FTC seeks to overturn acquisition of Palmyra Park Hospital

Topics: Mergers and Acquisitions, Health Systems, Strategy

August 21, 2012

The federal government is urging the Supreme Court to overturn two lower court rulings that it says helped create a hospital monopoly in Southwest Georgia.

The Federal Trade Commission (FTC) has argued since April 2011 that Phoebe Putney Health System's move to acquire Palmyra Park Hospital creates an anticompetitive climate. FTC filed a complaint alleging that the merger would allow the health system to raise prices for commercial health plans, which would harm patients, local employers, and employees, according to a March release.

However, the 11th Circuit U.S. Court of Appeals in Atlanta in December 2011 upheld the U.S. District Court for the Middle District of Georgia ruling against the FTC's complaint.

Lawyers from the Office of the Solicitor General have since filed a 52-page argument to the Supreme Court on behalf of the FTC. The entire case touches upon previous conflicts between the state's rights to regulate local economies and the federal government's position that favors market competition.

Public hospitals await ruling addressing the 'state action' doctrine

Public hospitals across the country are keeping a close eye on how the "state action" policy will fare in this case.

The Supreme Court ruled in past cases that political subdivisions and states may legally displace competition.

However, FTC says that state political subdivisions, such as hospital authorities, are permitted to interfere only when the state establishes regulations under the premise of "state action." The agency claims that Georgia's hospital-authorities law did not take such measures (Carlson, Modern Healthcare, 8/20; FTC release, 3/23).

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