Federal Trade Commission Bureau of Competition Director Henry Liu called Novant Health's decision to call off its plan to acquire two hospitals from Community Health Systems "a win for consumers."
Winston-Salem, N.C.-based Novant Health on June 18 ended its proposed $320 million acquisition of Mooresville, N.C.-based and Statesville, N.C.-based Davis Regional Medical Center from Franklin, Tenn.-based CHS after an appellate court granted the FTC an emergency injunction blocking the deal. The FTC had argued that the transaction would "irreversibly consolidate the market for hospital services in the Eastern Lake Norman Area in the northern suburbs of Charlotte."
"Now with this deal off the table, Novant and Community Health Systems will continue to compete against one another, delivering better outcomes for patients in both quality of care and price," Mr. Liu said in a July 1 FTC news release.
Mr. Liu also stated that hospital consolidation "diminishes the quality of care and increases costs for critical services."
"Novant’s deal with Community Health Systems would have followed this same trend to the detriment of North Carolinians," he added.
Novant said on June 18 that, with the FTC's continued roadblocks, it did not see a way to finalize the acquisition.
"The communities served by these facilities deserve better than the fate they've been dealt by the FTC, so we will look for other ways to support patients and clinicians in these communities," Novant stated.
For-profit CHS said on June 19 that it is "evaluating the current operations" at the two North Carolina hospitals. The system assured that in the interim, there will be no disruption to patient care or other immediate changes to the services offered by the hospitals.
The FTC and Justice Department updated their merger guidelines in December, outlining the factors and frameworks used to review proposed transactions. Under the guidelines, health systems are not allowed to merge if doing so prevents a potential competitor from entering the market or reduces incentives to pay higher wages. The guidelines could also be used to challenge cross-market mergers that have been historically difficult to contest.