Merger crackdown? Feds to take Georgia hospital deal to Supreme Court

FTC maintains that hospital merger should come under antitrust scrutiny

U.S. Solicitor General Donald Verrilli Jr. this week disclosed plans to take a major hospital merger in Georgia all the way to the Supreme Court, underscoring government interest in hospital market power.

Background on the case
Last year, the public Hospital Authority of Albany-Dougherty County acquired Palmyra Medical Center (PMC) from HCA. The Authority folded PMC into Phoebe Putney Health System (PPHS), a not-for-profit organization that operates the Authority's Phoebe Putney Memorial Hospital (PPMH).

The Authority and HCA finalized the deal in December after the 11th U.S. Circuit Court of Appeals in Atlanta upheld a district court ruling that deemed the merger immune to antitrust scrutiny because the Authority is a state-created entity. According to Modern Healthcare, Supreme Court precedent establishes states' power to create monopolies under the state action doctrine. 

Taking it to the highest court
In a deadline extension application filed with the Supreme Court, Verrilli disclosed his decision to appeal on the Federal Trade Commission's (FTC) behalf, Modern Healthcare reports.

According to FTC, the deal places all acute-care hospital beds in Dougherty County and 86% of beds in the six-county surrounding area under PPHS' control. "This case is about whether normal antitrust laws apply to an agreement that allegedly would centralize control of health care in Albany, Georgia, into a monopoly," FTC General Counsel Will Tom said in a statement. "Monopolies in health care usually raise prices substantially, harming patients and employers alike." The FTC also has said that the Authority was serving as a "straw man" in an otherwise private acquisition.

Hospital officials say they will continue transitioning the hospital into the system as the case proceeds. "We are stunned and disturbed by this recent development," said Ralph Rosenberg, who chairs the Authority, adding, "The FTC continues to waste taxpayers' money and our community's money to challenge an already decided case" (Carlson, Modern Healthcare, 2/27 [subscription required]; Bleau, WFXL-TV, 2/26).

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