Walnut Creek, Calif.-based John Muir Health is calling off its plans to acquire San Ramon (Calif.) Regional Medical Center from majority owner Tenet Healthcare.
John Muir has held a 49% stake in San Ramon Regional since 2013 and had planned to acquire the remaining 51% from Dallas-based Tenet for $142.5 million.
The news comes one month after the Federal Trade Commission 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 decided not to fight the FTC in court "due to the cost and disruption of litigation," according to a Dec. 18 statement shared with Becker's.
"We maintain our shared belief that the proposed transaction would have provided substantial benefits for patients and the community," John Muir said in a statement. "However, the significant investment of time and money required to litigate can be better spent on other initiatives within our health systems and in support of our joint venture."
San Ramon Regional, a 123-bed facility, will continue to operate under the current Tenet-John Muir joint venture structure, with Tenet continuing to manage hospital operations.
After this announcement, the FTC and the State of California moved to dismiss their federal court case and the FTC dismissed its administrative challenge on Dec. 18.
"John Muir's anticompetitive hospital takeover would have driven up healthcare costs for critical services like heart surgery, spinal surgery and maternity care. It also threatened to eliminate improvements in care driven by competition, which directly benefit patients," FTC Bureau of Competition Director Henry Liu said in a statement. "Now that this transaction is terminated, John Muir and Tenet's San Ramon Regional Medical Center can continue competing head-to-head to offer high-quality care at the best prices for Californians in the I-680 corridor."
Tenet and John Muir said they were disappointed in the FTC decision to file a lawsuit and "strongly disagree" with the assumptions and conclusions reached in the agency's court submission.