Federal Trade Commission staff are expected to voice concerns about the competitive impact of a proposed Missouri hospital merger in an internal report due this month.
In August, the FTC requested additional information about the proposed merger between 158-bed Freeman Hospital and 105-bed Oak Hill Hospital, both in Joplin, Mo. (Sept. 5, p. 4). Last month, the hospitals agreed to delay their merger until at least Nov. 30 while the FTC continues its investigation. The inquiry is being conducted by the FTC regional office in Denver.
"I'm not optimistic about the Denver office's recommendation," said Kelby Krabbenhoft, president and chief executive officer of Freeman. "I'm op-timistic that once people in Washington look at the pro-competitive aspects of the merger, those will outweigh the statistical findings," he said.
When the FTC review is completed, Freeman and Oak Hill plan to form Health SouthWest Alliance of Missouri, which will own three of the market's five hospitals. They will fight an attempt to block the merger, Mr. Krabbenhoft said.
A recommendation against the merger might reflect a measure of market concentration known as the Herfindahl-Hirschman Index, he said. It sums the squares of all individual market shares.
After a merger, market concentration would fall outside acceptable ranges in the FTC-defined market of two southwestern Missouri counties.
Freeman, Oak Hill and rival St. John's Regional Medical Center are in Joplin, a city of 42,000 in Jasper County. Freeman also owns 67-bed Freeman Neosho (Mo.) Hospital, about 25 miles southeast of Joplin in Newton County.
The fifth hospital is 58-bed McCune-Brooks Hospital in Carthage, Mo., which is also in Jasper County.
Combined, Freeman and Oak Hill control 330, or about 46%, of the market's 719 staffed acute-care beds, according to the latest figures from the American Hospital Association. St. John's, with 331 beds, also has about 46% of the staffed beds.
A merger will increase competition because St. John's would face a rival of equal strength, Mr. Krabbenhoft argued. St. John's president and CEO, Robert Brueckner, said a merger between Freeman and Oak Hill wouldn't change the market.