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ProMedica asks appeals court to rehear antitrust case


By Bob Herman
Posted: June 19, 2014 - 3:15 pm ET
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ProMedica is asking the full 6th U.S. Circuit Court of Appeals to rehear its St. Luke's Hospital antitrust case, the next step toward the U.S. Supreme Court in the Ohio health system's battle to keep a suburban hospital acquired nearly four years ago.

In April, a three-judge panel sided with the Federal Trade Commission and ordered ProMedica to divest St Luke's Hospital in Maumee, about 10 miles southwest of Toledo, where ProMedica is based.

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In the April opinion, the judges said the 2010 acquisition would reduce competition and lead to higher prices for health plans and patients.

ProMedica argues that the panel relied on a “flawed approach” in its decision. The FTC contended St. Luke's has given ProMedica a lion's share of the market in several service areas—most notably, more than 50% market share for primary and secondary services and more than 80% for obstetrical services. The panel said in its decision that there was a “strong correlation between ProMedica's prices—i.e., its ability to impose unilateral price increases—and its market share.”

But ProMedica argues that correlation does not equal causation and the panel erred in making that leap. “It was assuming causation without any proof of causation,” Doug Cole, an attorney with Organ, Cole & Stock representing ProMedica, said in an interview.

Attorneys for ProMedica wrote that selling St. Luke's would be fatal for the struggling community hospital. “The panel's flawed analysis thus affirms a divestiture order that is little more than a slow-motion death sentence for St. Luke's, a sentence that has important consequences for Toledo,” according to the petition (PDF).

However, the court rejected that argument in April, writing that the hospital was “weakened” but not in immediate jeopardy of eliminating services or closing altogether.

Mergers in the healthcare sector have been a growing focus of the FTC, and Cole believes this case could be a bellwether for other hospital transactions that occur within small to midsize markets.

“We think that's troubling,” Cole said. “We think consolidation and coordination among various hospitals will be a necessary step in order for hospitals to operate in the Affordable Care Act environment.”

Cole said it's rare to obtain a full-court rehearing. If the court does decide to review the case again, it would likely request a response from the FTC within a couple weeks.

If the petition fails, the next step would be the Supreme Court. Cole did not state what ProMedica would ultimately do, but he said the health system “remains very committed to the transaction” and will exhaust all of its legal options.

Follow Bob Herman on Twitter: @MHbherman


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