Healthtrust-The Hospital Co. would be required to sell off the prize hospital in a three-hospital deal with Holy Cross Health System Corp. under a proposed consent agreement being reviewed by the Federal Trade Commission, MODERN HEALTHCARE has learned.
Sources familiar with the FTC's antitrust challenge of the deal confirmed the terms of the proposed settlement last week. The sources spoke on the condition of anonymity.
Spokesmen for the two systems involved in the transaction wouldn't comment on the pending settlement. FTC offi-cials also declined comment.
But sources said the settlement, endorsed by Healthtrust and Holy Cross, is pending before the FTC's five commissioners in Washington. They're expected to act on the settlement within the next several weeks.
In March, the commissioners authorized the agency to file an antitrust challenge against the deal. They said it would violate Section 7 of the Clayton Act, which bars acquisitions that may reduce competition (March 28, p. 3).
Under the challenged deal, Healthtrust, a Nashville, Tenn.-based for-profit chain of 115 hospitals, would buy Holy Cross' three hospitals and 10 outpatient clinics in Utah for an undisclosed amount. The hospitals are Holy Cross Hospital in Salt Lake City, St. Benedict's Hospital in Ogden and Holy Cross Jordan Valley Hospital in West Jordan.
The key hospital in the deal is 200-bed Holy Cross Hospital in Salt Lake City. Under the original deal, Holy Cross Hospital would have become the tertiary-care anchor of Healthtrust's nine-hospital network of primarily small and rural hospitals.
Sources said the antitrust settlement would allow Healthtrust to buy the three hospitals but require it to divest Holy Cross Hospital to an FTC-approved buyer within a specified time period. However, sources said the agreement would allow Healthtrust to contract or joint venture with Holy Cross Hospital in order to pursue or offer managed-care contracts.
Healthtrust already owns six hospitals in Utah, and four of them are considered to be in the same market as the Holy Cross facilities. Healthtrust signed a letter of intent to acquire the Holy Cross hospitals and clinics last October, but it has extended the tentative sales agreement at least twice because of the FTC's antitrust challenge.
However, the agency has yet to file a formal antitrust lawsuit against the two systems because of ongoing negotiations with the systems.
The negotiations, sources said, have led to a proposed consent agreement that's modeled after the consent agreement that allowed Columbia Healthcare Corp. to merge with HCA-Hospital Corporation of America.
That agreement requires the merged companies to divest 183-bed Aiken (S.C.) Regional Medical Center, which was considered to operate in the same market as another Columbia hospital (Feb. 14, p. 2). Under the consent agreement, Columbia/HCA Healthcare Corp. has 12 months to sell the Aiken hospital to an FTC-approved buyer.
Stewart Ellington, M.D., chief of staff at Holy Cross Hospital, said a similar arrangement appears likely in the Healthtrust case. Dr. Ellington has been a vocal critic of the FTC's intervention in the deal, arguing that Healthtrust needs a tertiary-care facility in Salt Lake City to compete with Intermountain Health Care, the not-for-profit system that owns 19 of the 41 acute-care facilities in all of Utah.
"(Healthtrust) will still be able to use Holy Cross Hospital by contract under the negotiated consent decree with the FTC," he said.
Dr. Ellington also said Healthtrust likely will have to sell the hospital to an out-of-state buyer because any system within Utah owns enough hospitals to create another antitrust problem.