Two hospitals in Fort Myers, Fla., that are under federal antitrust scrutiny for their proposed merger got a boost last week when two Florida officials said they supported the combination or at least wouldn't oppose it.
The Federal Trade Commission delayed an expected vote last week on whether to challenge the proposed acquisition of 201-bed Cape Coral (Fla.) Hospital by 602-bed Lee Memorial Hospital, hospital executives said (April 18, p. 3).
The FTC is expected to vote this week, hospital executives said. Sources familiar with the investigation said the hospitals told the FTC that they planned to delay the completion of the deal until April 27 to gain more political support for the merger. A Lee Memorial spokeswoman, however, said she didn't know why the FTC delayed its vote.
State officials, meanwhile, expressed support for the merger.
"We believe that the transaction is in the public interest of the citizens of Lee County because the affiliation of the two hospitals will allow for efficiencies in the management of the facilities that are not now available to Cape Coral Hospital," said Douglas Cook, director of the state Agency for Health Care Administration.
Mr. Cook said he based his opinion on documents provided to him by Lee Memorial that indicated, among other things, that the merged hospital would decrease patient charges.
He also cited an opinion issued by the state attorney general's office that stated acquisitions made by Lee Memorial were immune from antitrust prosecution under the "state action doctrine."
Under the doctrine, activities that are authorized by state law and actively monitored by the state are exempt from federal antitrust laws. A special law passed by the Florida Legislature in 1987 allows Lee Memorial to acquire property and otherwise conduct business like a privately owned hospital.
"A state may sanction anti-competitive conduct by its political subdivisions where the activity is authorized" by the state, wrote Jerome Hoffman, chief of the state attorney general's antitrust section, in an April 15 opinion.
Earlier this month, the two hospitals reached their agreement, which would create a two-hospital system controlling about 67% of the admissions in the five-hospital Lee County market (April 11, p. 16).
Columbia/HCA Healthcare Corp., which failed in its attempt to acquire Cape Coral, operates two of the other five hospitals in the county. Columbia opposes the merger on grounds it would reduce competition and give Lee Memorial greater negotiating clout with managed-care plans.