Winston-Salem, N.C.-based Novant Health scrapped its planned acquisition of two hospitals from Franklin, Tenn.-based Community Health Systems after an appellate court granted the Federal Trade Commission an emergency injunction blocking the deal.
The decision is a significant win for the FTC, which has ramped up antitrust enforcement against healthcare mergers and acquisitions over the last three years under Chair Lina Khan's leadership.
In December, the FTC and Justice Department updated their merger guidelines, which outline 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 challenge.
Here are six other health system deals that were called off after FTC enforcement actions or challenges under Ms. Kahn's leadership:
1. John Muir Health and Tenet Healthcare
In December, Walnut Creek, Calif.-based John Muir Health called off plans to fully acquire San Ramon (Calif.) Regional Medical Center from majority owner Dallas-based Tenet Healthcare. The FTC sued to block the deal, arguing that it would drive up healthcare costs in the area by eliminating head-to-head competition between John Muir and Tenet. The health systems said they strongly disagreed with the FTC but decided not to fight the agency in court "due to the cost and disruption of litigation," according to a statement shared with Becker's.
2. Steward Health Care and HCA Healthcare
In June 2022, Nashville, Tenn.-based HCA and Dallas-based Steward Health Care spiked their proposed deal that would have sees five Utah hospitals move to HCA. The FTC alleged the acquisition would eliminate the second-and fourth-largest health systems in Utah's Wasatch Front region, where about 80% of the state's residents live. The systems called off the plan 13 days after the FTC sued to block the deal.
3. RWJBarnabas Health and Saint Peter's Healthcare System
In June 2022, two New Jersey systems — New Brunswick-based Saint Peter's Healthcare System and West Orange-based RWJBarnabas Health — terminated a definitive agreement to merge after the FTC filed a suit to block the transaction. The commission alleged the deal would eradicate head-to-head competition between the two systems and increase prices for inpatient general acute care services. The deal would have given the combined health system a market share of about 50% for general acute care services in Middlesex County as a whole, resulting in a presumption of harm under the antitrust laws, according to the FTC.
4. Hackensack Meridian Health and Englewood Health
Edison, N.J.-based Hackensack Meridian Health and Englewood Health tore up plans to merge in April 2022 after a U.S. appellate court affirmed the order of the district court to block the deal. The FTC challenged the deal in 2020, arguing it would give Hackensack Meridian control of three of the six hospitals in Bergen County and raise healthcare costs. A district court judge agreed the acquisition would raise prices, despite the systems arguing that merging some operations would bring savings.
5. Care New England and Lifespan
In February 2022, Providence, R.I.=based Lifespan and Care New England called off plans to merge after the FTC filed a suit to block the deal. The merger would have given the combined system 80% of the market's hospital beds and ownership of eight of Rhode Island's 13 hospitals. The FTC cited competition concerns in its decision. Rhode Island Attorney General Peter Neronha said the state would join the FTC in the lawsuit, stating the deal would raise healthcare costs.
6. Crouse Health System and State University of New York Upstate Medical University
Syracuse, N.Y.-based SUNY Upstate Medical University and Crouse Health System abandoned plans to merge in February 2022 after the FTC voiced its opposition to the deal. The commission claimed the transaction would leave Syracuse with just two hospital systems — Upstate and St. Joseph's Health — and give the combined entity a 67% share of commercially insured inpatient services in Onondaga County.