FTC a Key Hurdle in Methodist's Acquisition

The agreed sale of the two Saint Francis Hospital facilities by Dallas-based Tenet Healthcare to Methodist Le Bonheur Healthcare for $350 million announced in December may not be finalized for months . . . if ever.

An official at one hospital speculated that it may be "late summer" before the deal is concluded. Likely involvement by the Federal Trade Commission (FTC) would impact the timeline, but by how much evidently is difficult to predict. The transaction is being questioned by two of Memphis hospital systems - Baptist Memorial Healthcare Corp. (BMH) and Regional One Health.

Shortly after the proposed sale was announced, it was reported that Baptist had filed a challenge with the FTC, but that has been denied.

Ayoka Pond, director of communications at BMH said, "We have not filed any opposition with the Federal Trade Commission, however, given the magnitude of this transaction we are reasonably certain the Federal Trade Commission will be reviewing this proposed transaction given the potential negative impact it could have on the consumers in Memphis."

Apparently, the action was not necessary. In this situation, action by the FTC is almost automatic. A Nashville-based attorney who is familiar with healthcare litigation, told Memphis Medical News, "It would not be unusual for the FTC to review Methodist's acquisition of Saint Francis to determine the economic impact of the merger.

"All parties involved should expect a regulatory review, in fact, regardless of whether it is requested by a specific entity or the FTC decides to examine on its own. A review does not mean the transaction won't happen as planned, nor is there any guarantee it won't affect the transaction. Any implication is unknown until after the review is complete."

Jason Little, BMH president and CEO, said he expected the FTC to be interested and would be willing to make information available to the FTC.

Reginald Coopwood, MD, president and CEO of Regional One, who told guests at a black tie event shortly after the sale was announced that his hospital had made an offer to Tenet for Saint Francis and he "regretted that it did not work out."

While Dr. Coopwood has not mentioned the FTC, Regional One released a statement concerning the sale, saying the lack of competition would "impact the community's healthcare options. Competition leads to lower prices and often improves quality . . . consolidation between close competitors does the opposite.

"Regional One Health is actively considering options to oppose this transaction," the statement said. "We will continue to advocate for patients to have adequate options in choosing where to receive their healthcare services."

The actual proposed sale would mean Methodist Le Bonheur Healthcare (MLBH) would gain Saint Francis Hospital-Bartlett and Saint Francis Hospital-Memphis. The purchase includes the physician practices associated with both hospitals and six MedPost urgent care centers.

"Memphis is already a highly concentrated healthcare market," the Regional One statement said. "Market consolidation that exceeds 60 percent could negatively impact the community's healthcare options. It would eliminate choice and potentially lead to service consolidation that would not be of benefit to this community. In his U.S. House of Representatives committee testimony economist and author Martin Gaynor said mergers that eliminate close competitors cause direct harm to competition.

"Regional One Health explored the possibility of purchasing Saint Francis from Tenet Healthcare," the statement continued. "Discussions occurred with Tenet, and we responded to the solicitation to purchase the assets. We believe Regional One Health and Saint Francis offer services that would have been complimentary and expanded access for patients across the community."

Michael Ugwueke, MLBH president, CEO, said Memphis would benefit from the sale.

"Consistent with our mission, the addition of Saint Francis hospitals will increase access to high quality healthcare, expand services and enhance the delivery of care to improve the overall health of the communities we serve," Ugwueke said.

Sally Deitch, Saint Francis Healthcare president and CEO, commented, "We have the highest respect for Methodist Le Bonheur, and we are pleased that our facilities will become part of this regional system."