The addition of 10 Healthtrust hospitals in Florida to Columbia/HCA Healthcare Corp.'s complement of 46 in the state won't present antitrust problems, company officials said.
But Jerome Hoffman, chief of the state attorney general's antitrust section, said he plans to launch an investigation just to be sure. With managed-care payers contracting with providers on a state and regional level, the potential merger of Columbia/HCA and Healthtrust presents implications for the state as a whole.
"We have seen Columbia acquire its nearest competitor for the third time," Mr. Hoffman said. "The danger may not result from anticompetitive effects in specific markets, except for a couple, but that the merger may reduce competition to a dangerous level from a statewide perspective."
Two weeks ago, Columbia/HCA announced it would acquire Healthtrust in a 5.6 billion deal (Oct. 10, p. 2). In Florida, Columbia/HCA would control 26% of the state's 217 hospitals and 61% of the state's 92 investor-owned hospitals.
In Florida, mergers and acquisitions have become more popular in the past two years as the state has attempted to reduce its uninsured population and contain costs through its own brand of "managed competition." Some 17% of Florida's 14 million population is uninsured, compared with 14% nationally.
As a result, dozens of hospitals, medical groups and insurers have formed networks to compete for managed-care contracts either through equity ownership or affiliations.
To some not-for-profit hospital executives, however, the Columbia/HCA-Healthtrust merger announcement was a grim reminder that they're competing with a multibillion-dollar conglomerate. With dozens of hospitals, surgery centers and clinics across the state, Columbia/HCA plans to create a statewide healthcare network, including insurance products.
"We have several concerns," said Wayne NeSmith, president of the Association of Voluntary Hospitals of Florida. The association represents 90 not-for-profit hospitals. "When they get into dominating markets with so many hospitals, get into the insurance business with HMOs and begin offering statewide plans, they are competing with hospitals across the state."
Mr. NeSmith said federal antitrust enforcement agencies seem to have a double standard when reviewing Columbia/HCA acquisitions and not-for-profit mergers.
"When a couple of our hospitals try to merge, there are major antitrust problems," Mr. NeSmith said. He cited federal challenges of the deals between Morton Plant Health System and Mease Health Care in northern Pinellas County, and Lee Memorial Hospital and Cape Coral Hospital in the Fort Myers market.
"Columbia seems to be forming a monopoly with their previous mergers, and nobody has a problem with that," Mr. NeSmith said.
Columbia acquired Galen Health Care in 1993 and completed its merger with Hospital Corporation of America in February. Out of the 170 hospitals Columbia acquired in those deals, federal regulators required the company to divest two-one in Kissimmee, Fla., and the other in Aiken, S.C.
One specific market of particular interest to state regulators is the northwest Florida panhandle region. From Pensacola to Tallahassee, Columbia/HCA stands to own 35%, or eight, of the 12-county area's 23 medical-surgical hospitals, and 36%, or 1,424, of its 3,934 beds. It currently owns six hospitals.
However, in Okaloosa County, Columbia/HCA would own all four medical-surgical hospitals. In the two counties west of Okaloosa and the three counties east of Okaloosa, the company would own 50% of the 14 hospitals and 48% of the 2,589 beds.
"There's no problem in that," said Daniel Moen, president of Columbia/HCA's Florida division. "If we weren't going to sell Destin Hospital, there might be objections." In a settlement with the state, Columbia/HCA has agreed to close the 50-bed hospital in Destin, Fla., and either sell it by Dec. 31 or give up its license.
In the 34-hospital Tampa-St. Petersburg-Clearwater market, Columbia/HCA would control about 33% of the market's hospitals, increasing its numbers to 11 from eight.
Columbia/HCA hospitals in the Miami-Fort Lauderdale-Palm Beach market would increase to 17 from 14. In the market, comprising Dade, Broward and Palm Beach counties, the company would own 31% of the 54 hospitals.
In the southwest Florida area of Fort Myers, Columbia/HCA earlier this year was turned down in its bid to acquire Cape Coral Hospital in a market-share battle with Lee Memorial. Instead, Columbia/HCA would pick up Healthtrust's East Pointe Hospital, an 88-bed facility in eastern Lee County.
Columbia/HCA would control three of the five hospitals in Lee County and 33% of the county's total inpatient admissions. The other two hospitals, Lee Memorial and Cape Coral, are in federal appeals court fighting a challenge to their proposed merger. A decision is expected this week.