In what could become the first constitutional test of a state healthcare antitrust exemption law, the state of Montana late last week conditionally approved the proposed merger of the only two hospitals in Great Falls, Mont.
The merger would give the hospitals a monopoly over acute-care services. The closest hospital is in Helena, 90 miles south of Great Falls.
The hospitals-339-bed Montana Deaconess Medical Center and 145-bed Columbus Hospital-have a series of deadlines, starting in 60 days, to meet a number of conditions placed on the deal by the Montana attorney general's office.
For example, the hospitals must agree to donate a small office building to the local Planned Parenthood organization. The rental revenues from the building will help Planned Parenthood maintain abortion services in the area.
Under the hospitals' agreement, Montana Deaconess would stop performed abortions. Columbus is a Roman Catholic facility, and the merged hospitals would be owned by Sisters of Providence in Spokane, Wash.
The hospitals also must agree to an as-yet-undetermined cap on revenues from patient-care services.
If they agree to the terms, the hospitals could become the first to complete a full-asset merger under a state exemption law. Last December, two North Carolina hospitals obtained antitrust clearance of their merger-like partnership under that state's law.
At least 18 other states have similar laws on the books that grant antitrust exemptions to hospitals and other providers that can show the consumer benefits of their deals outweigh any anti-competitive risk.
A spokesman for the two hospitals said the hospital boards are expected to act on the proposed merger later this month.
The Federal Trade Commission has been monitoring the deal and could challenge it regardless of any state pact.