Healthtrust-The Hospital Co. expects to close its three-hospital deal in Utah with Holy Cross Health System Corp. within 60 days now that the for-profit chain has settled its antitrust dispute with the Federal Trade Commission.
As expected, the settlement, unveiled last week by the FTC, requires Healthtrust to divest the key hospital in the deal, 200-bed Holy Cross Hospital in Salt Lake City, to an FTC-approved buyer (June 13, p. 10).
The settlement also requires Healthtrust to sell off five of 10 outpatient clinics that were included in the acquisition package involving Holy Cross.
Terms of the settlement were outlined in a proposed consent agreement issued by the FTC on July 11. The agency's five commissioners in Washington voted 3-1 on July 8 to approve the agreement, with one commissioner not voting. The consent agreement is subject to a 60-day public comment period before it becomes final.
In March, the commissioners by the same 3-1 vote authorized the FTC to file an antitrust challenge of Healthtrust's proposed acquisition of Holy Cross' three Utah hospitals and 10 outpatient clinics (March 28, p. 3). They said the deal would violate Section 7 of the Clayton Act, which bars acquisitions that may reduce competition.
The deal would have given Healthtrust control of seven hospitals in the same market, including the three Holy Cross facilities. Healthtrust owns two other hospitals in Utah, outside of the market in question. In addition to Holy Cross Hospital, the deal, valued at about $125 million, included St. Benedict's Hospital in Ogden and Holy Cross Jordan Valley Hospital in West Jordan.
The key hospital in the acquisition was Holy Cross, which was to have become the tertiary-care anchor of Healthtrust's nine-hospital network of primarily small and rural hospitals.
Nashville, Tenn.-based Healthtrust signed a letter of intent to acquire the hospitals and clinics from Holy Cross Health System Corp., the not-for-profit system based in South Bend, Ind., last fall. The FTC's antitrust probe began in December, forcing the systems to extent their acquisition agreement at least twice.
After the commissioners voted to challenge the deal, the FTC and Healthtrust began settlement negotiations, and the agency never filed its antitrust complaint.
However, the FTC included a draft complaint with the settlement documents it released last week.
According to the agency, the acquisition would have eliminated actual and potential competition between Healthtrust and Holy Cross hospitals in a geographic market that included three counties: Weber, Davis and Salt Lake.
The FTC also said the deal would increase the possibility of collusion among the remaining hospital competitors.
In March, the Justice Department settled antitrust charges that eight Utah hospitals and two healthcare associations conspired to fix nurse wages (March 21, p. 3). Six of the eight hospitals named in the wage-fixing settlement were involved in the Healthtrust-Holy Cross deal.
The elimination of competition and the increased possibility of collusion "may deny patients, physicians, third-party payers and other consumers of hospital services...the benefits of free and open competition based on price, quality and service," the FTC said.
Under the settlement, Healthtrust must divest Holy Cross Hospital and the five disputed clinics within six months after the consent agreement becomes final. Until then, the chain must run the facilities as separate organizations and not make any changes in their operations that would affect their financial viability.
In addition to selling the properties, Healthtrust for a period of 10 years can't acquire another hospital in the market without the agency's approval.
However, apparently addressing Healthtrust's need for access to tertiary services in the market, the chain doesn't need the FTC's approval to start a new hospital service or to enter into joint-venture arrangements not exceeding a $1 million investment.