The Federal Trade Commission has asked a federal court to delay the merger of the only two hospitals in Port Huron, Mich., pending the resolution of antitrust charges against the facilities.
The FTC filed its motion for a temporary restraining order and preliminary injunction on Nov. 29 in U.S. District Court in Detroit.
Although the court has yet to hear arguments on the motion, the hospitals conceded that the court likely will give the FTC what it wants-at least for now.
"The preliminary injunction will provide a period of discovery (that) will allow the hospitals to more fully understand the FTC's reasons for opposing the merger," the hospitals said in a joint statement.
The motion comes about three weeks after the FTC's five commissioners in Washington voted to authorize the agency to file an antitrust challenge against the transaction (Nov. 14, p. 4). The motion also indicates that talks between the hospitals and the FTC failed to produce a settlement.
"We've been in close contact with the FTC since the vote, and it doesn't appear that we're able to find any common ground," said Mary Trimmer, president and chief executive officer of Mercy Hospital, one of the merging facilities.
Although the hospitals are preparing to fight the FTC's antitrust charges, they're still open to opportunities to avoid litigation, Ms. Trimmer said.
According to the challenged transaction, 119-bed Mercy and 264-bed Port Huron Hospital would merge under a new corporation called Local Health System. Mercy Health Services of Farmington Hills, Mich., which owns Mercy, would co-own the new corporation with St. John Health System of Detroit. St. John also owns 68-bed River District Hospital in nearby St. Clair, Mich.
The transaction would place three of the four hospitals and 93% of the licensed beds in St. Clair County under common ownership.
The hospitals say the merger would improve healthcare services in the market by enabling them to better coordinate resources and by generating at least $53 million in economic efficiencies over five years.
In its motion filed in federal court, the FTC said the transaction would violate Section 7 of the Clayton Act, which bars acquisitions that may reduce competition.
If and when the FTC obtains its injunction, it would have 20 days to file a formal antitrust complaint with a federal administrative law judge assigned to the agency in Washington.
The hospitals announced their merger plans in January with the goal of closing the deal within five to 12 months. But the FTC launched a probe of the merger in May, which led to the decision to challenge the deal.