(Story updated at 3:45 p.m. ET)
In another sign of government interest in healthcare market power, U.S. Solicitor General Donald Verrilli Jr. plans to appeal to the Supreme Court a decision that allowed a $198 million hospital purchase that greatly consolidated hospital acute-care services in southwest Georgia.
Verrilli disclosed the decision to appeal on behalf of the Federal Trade Commission in an application for a deadline extension (PDF)
with the Supreme Court. The public Hospital Authority of Albany-Dougherty County first disclosed the planned appeal on Sunday in a joint statement with Phoebe Putney Health System blasting the government's move.
“We are stunned and disturbed by this most recent development,” Ralph Rosenberg, chairman of the hospital authority, said in the statement. “The FTC continues to waste taxpayers' money and our community's money to challenge an already decided case.”
The authority has long owned Phoebe Putney Memorial Hospital and leased it to the independently run not-for-profit Phoebe Putney Health System for $1 a year.
In December, the authority acquired Phoebe's direct competitor in acute-care
, Palmyra Medical Center, from HCA and placed it under Phoebe Putney Health System's direct control using a similar lease arrangement. HCA and the hospital authority executed the deal a week after the 11th U.S. Circuit Court of Appeals in Atlanta upheld a district court ruling that found the sale was immune to antitrust scrutiny.
The FTC says the transaction gives Phoebe Putney control over 100% of the acute-care hospital beds in Dougherty County, and 86% control in the surrounding six-county market, which would “tend to create a monopoly,” Verrilli's application for an extension says.
In an e-mailed statement Monday, FTC General Counsel Will Tom said, “This case is about whether normal antitrust laws apply to an agreement that allegedly would centralize control of healthcare in Albany, Georgia, into a monopoly. Monopolies in healthcare usually raise prices substantially, harming patients and employers alike.”
The hospitals successfully argued in court that the purchase of Palmyra was immune from antitrust scrutiny because the hospital authority is a state-created entity, and past Supreme Court precedent gives states and their political subdivisions the ability to create monopolies under the doctrine of state action.
The FTC has argued that the public authority was being used as a “straw man” in a private transaction negotiated by the not-for-profit hospital system that operates Phoebe Putney Memorial under lease.
On Dec. 9, the 11th Circuit judges ruled that since hospital authorities in Georgia were expressly given power under state law to acquire and lease out hospitals, state lawmakers must have intended to confer the state's antitrust immunity to them.
The FTC has three active cases pending in federal courts challenging hospital mergers. In addition to the Phoebe Putney-Palmyra challenge, the FTC has challenged the acquisition of St. Luke's Hospital
in Maumee, Ohio, by ProMedica Health System, and the purchase
of Rockford (Ill.) Memorial Hospital by OSF Healthcare System in Peoria.