Healthcare Business News

Supreme Court rules against Phoebe Putney

By Joe Carlson
Posted: February 19, 2013 - 11:45 am ET

The U.S. Supreme Court has issued a ruling that could jeopardize a $200 million hospital acquisition involving Phoebe Putney Health System in Georgia, after a unanimous court decided that the hospital deal was not immune from antitrust laws.

The Federal Trade Commission has been fighting since 2010 to block the acquisition of a former HCA hospital by its only competitor in Albany, Ga., the public hospital authority that also owns not-for-profit Phoebe Putney's hospitals. But until the Supreme Court ruled on Tuesday, the lower federal courts had said the deal was beyond the reach of federal antitrust laws because of the hospital authority's ownership.

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“We hold that Georgia has not clearly articulated and affirmatively expressed a policy to allow hospital authorities to make acquisitions that substantially lessen competition,” Justice Sonia Sotomayor wrote for the unanimous court. “The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings.”

Not only does the ruling potentially narrow state hospital authorities' use of so-called “state-action” immunities, it could also imperil Phoebe Putney's acquisition of the 102-bed hospital, which is now called Phoebe North.

A judge for the 11th U.S. Circuit Court of Appeals in Atlanta wrote in December 2011 that he agreed with the FTC that the deal was likely to “substantially lessen competition or tend to create, if not create, a monopoly.”

However, that court ruled against the FTC because it found the transaction was immune from the commission's power to review. The Supreme Court on Tuesday threw out the immunity.

Hospital officials have not conceded in court filings that the deal was anti-competitive without the antitrust exemption the Supreme Court tossed Tuesday. But FTC officials have said the case eliminates competition for acute care in several counties in southwest Georgia, and in fact was designed to be protected under the more expansive reading of state-action protection.

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