The Hospital Authority of Albany Dougherty County in Georgia and Albany, Ga.-based Phoebe Putney Health System have agreed to a settlement with the Federal Trade Commission, resolving charges that the parties' acquisition of Palmyra Park Hospital harmed competition.
Under the deal, the Hospital Authority and Phoebe Putney are required to give the FTC advanced notice of future transactions that involve not only hospitals, but also outpatient facilities or physician practice groups. The parties will also be barred from opposing potential competitors' certificate of need applications for acute-care hospitals in a six-county area.
The settlement involves some unique circumstances, however. The FTC prefers divestiture to restore any competition that was lost due to an improper merger, but CON laws in Georgia complicated this traditional remedy.
If Phoebe Putney sold back Palmyra Park, it would trigger a CON review. "Unfortunately, Albany is deemed 'over-bedded' by Georgia's strict need assessment criteria," according to the FTC. This makes it unlikely that any possible buyer after divestiture would obtain the necessary CON approval to operate Palmyra Park as an independent hospital.
This has been one of the more closely watched and most complicated antitrust cases in the hospital sector. It stems from an FTC administrative complaint in April 2011.
The FTC alleged the Hospital Authority and Phoebe Putney's $195 million acquisition of Palmyra Park, now Phoebe Putney's north campus, was essentially a monopolistic merger that would allow Phoebe Putney to raise its prices for general acute-care hospital services to commercial payers. The FTC also alleged Phoebe Putney structured the transaction so the Hospital Authority would deter federal antitrust scrutiny under Georgia's state action doctrine, which gives local government entities power to acquire hospitals.
The case made it to the Supreme Court, where in February, justices sided with the FTC in a unanimous ruling that lower courts had improperly dismissed the antitrust complaint. The court said "because Georgia's grant of general corporate powers to hospital authorities does not include permission to use those powers anti-competitively, we hold that the clear-articulation test is not satisfied and state-action immunity does not apply." The clear-articulation test refers to an assessment of whether the state clearly articulated and affirmatively expressed permission for hospital authorities to make acquisitions that would substantially lessen competition.
More Articles on Phoebe Putney and the FTC:
5 FTC Challenges to Hospital Mergers: Key Concepts for Today's Antitrust Environment
Supreme Court Sides with FTC in Phoebe Putney Case
"Disappointed" Phoebe Putney Closely Examining Supreme Court Decision