ROSWELL, N.M.—Community Health Systems, Franklin, Tenn., withdrew its interest in buying the hospital in Roswell that it doesn't already own after receiving word that the increasingly vigilant Federal Trade Commission planned an extensive review of the transaction.

A subsidiary of investor-owned Community had proposed buying 26-bed Roswell Regional Hospital for undisclosed terms during the first quarter of 2012 after the hospital announced exclusive negotiations with the large national hospital chain in September. A separate subsidiary of Community already owns 162-bed Eastern New Mexico Medical Center, the only other acute-care hospital in Roswell. Community owns, leases or operates 132 hospitals in 29 states. Community said the decision to terminate its plans to buy Roswell Regional came after recently receiving word that the FTC planned to extend its review of the transaction to a time beyond when the deal was supposed to close. The FTC has met the ongoing wave of hospital merger activity with an aggressive eye toward challenging proposed deals that would concentrate market power and lead to a likelihood of higher healthcare prices. In 2011, the commission filed legal challenges against hospital mergers in Rockford, Ill.; Maumee, Ohio; and Albany, Ga.