The first application of the government's new antitrust guidelines to hospital mergers benefited the new Columbia/HCA Healthcare Corp. hospital chain and not members of the not-for-profit sector.
The not-for-profits had sought the guidelines in part to protect themselves against aggressive market behavior by companies such as Columbia.
The irony was tucked away in the proposed consent agreement that allowed Columbia to complete its merger with HCA-Hospital Corporation of America to form the nation's largest hospital chain (See story, p. 23). The agreement gives the firms a three-hospital monopoly in Florida's panhandle.
Under the agreement with the Federal Trade Commission, Columbia and HCA agreed to sell HCA's 183-bed Aiken (S.C.) Regional Medical Center. Columbia owns 292-bed Augusta (Ga.) Regional Medical Center. The FTC said the merger would give the companies control of two of the market's five hospitals and would violate Section 5 of the Clayton Act, which bars acquisitions that may reduce competition.
But the consent agreement approved by the five FTC commissioners by a 4-1 vote contained two partial dissents.
In a one-page dissent, Commissioner Mary Azcuenaga agreed with the order to divest Aiken Regional but opposed the decision against doing the same thing in Chattanooga, Tenn. HCA operates 235-bed HCA Parkridge Medical Center there, and Columbia owns 128-bed East Ridge Hospital in a Chattanooga suburb.
In a similar case nearly a decade ago, the FTC in 1985 ordered HCA to divest two hospitals in Chattanooga and drop its management contract of a third after the company gained control of five of the city's 11 hospitals at that time.
She said, "I am not persuaded that the competitive situation is so fundamentally different to justify abandonment of the (FTC's) earlier position."
But perhaps more important was the two-page dissent written by Commissioner Deborah Owen. She said she disagreed that the Columbia-HCA merger would produce anti-competitive effects in the Augusta market. And she said, "There is evidence*.*.*.*that in one market, the consolidation of the Columbia and HCA hospitals may create a monopoly that could injure consumers."
Ms. Owen did not disclose the location of the market, and Lee Wood, a Columbia spokesman, said, "There's no reason for us to discuss or disclose the market addressed by the dissenter."
But, a source familiar with the situation said it was in and around Fort Walton Beach, Fla.
Columbia owns 236-bed Fort Walton Beach Medical Center and 50-bed Destin (Fla.) Hospital, about seven miles east. HCA owns 75-bed HCA Twin Cities Hospital in Niceville, Fla., about 15 miles northeast of Fort Walton Beach.
HCA also owns one of three hospitals in Pensacola, Fla., about 67 miles west of Fort Walton Beach, and one of two hospitals in Panama City, Fla., about 87 miles east of Fort Walton Beach.
Ms. Owen said the FTC didn't conduct a thorough investigation of the market because a merger there fell within one of the six "safety zones" outlined by the FTC and the Justice Department in their new healthcare antitrust guidelines.
Under the rules, issued last September, the agencies said they'll overlook mergers in which one hospital has fewer than 100 beds, has fewer than 40 patients per day and is more than 5 years old.
Ms. Owen, who had opposed the guidelines, said they "may have claimed their first casualty. Perhaps a full investigation would have demonstrated that the merger*.*.*.*posed no anti-competitive problem. But we will never know at the level of confidence that consumers have a right to expect of us."