Healthcare Business News

FTC wins appeal in ProMedica case

By Joe Carlson
Posted: April 22, 2014 - 1:45 pm ET

The Federal Trade Commission extended its recent winning streak in healthcare cases Tuesday when a federal appeals court agreed that a 2010 hospital acquisition by Ohio's ProMedica system was illegal.

In a 22-page opinion, a unanimous panel of judges at the 6th U.S. Circuit Court of Appeals in Cincinnati wrote that the FTC correctly decided that Toledo-based ProMedica was extremely likely to illegally increase prices after buying the suburban St. Luke's Hospital in Maumee, a well-to-do corner of Lucas County, Ohio.

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The court upheld an earlier order from the FTC that ProMedica must divest St. Luke's to another buyer. The judges ruled none of ProMedica's arguments against the order were strong enough to overturn it.

"We are extremely disappointed by today's decision and intend to appeal," ProMedica said in a statement. "We are committed to exhausting all of our legal options."

The decision has been closely watched because it's likely to be appealed to the U.S. Supreme Court in an era when government regulators including the FTC are taking an increasingly aggressive stance in hospital-merger cases.

The FTC won a U.S. District Court case in Boise, Idaho, earlier this year in which it challenged a merger between the state's largest health system and multispecialty practice. And last year the agency won a case at the Supreme Court involving the right of a public hospital authority in Georgia to buy its only competitor in a six-county area.

Before the 2010 acquisition, ProMedica was one of four hospital systems in the county and it controlled 47% of the market for acute care, compared with St. Luke's 11%.

Yet even though ProMedica hospitals have lower overall quality scores and higher prices than those of St. Luke's, the expansion by ProMedica was likely to lead to higher prices for the public, the 6th Circuit judges wrote.

“In this market, the higher a provider's market share, the higher its prices,” judges wrote. “In ProMedica's case, that fact is not explained by the quality of ProMedica's services or by its underlying costs.”

Story in progress.

Follow Joe Carlson on Twitter: @MHJCarlson

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