It's enough to make an antitrust investigator's heart burst with joy.
"It" is local opposition to a high market share hospital merger. Politically, it's tougher for federal antitrust enforcers to challenge a deal in healthcare or any other industry that's supported by local consumers, businesses, insurers, lawmakers and other providers.
But there's no shortage of local opposition to the mergerlike partnership of the three largest hospital systems in northwest, or upstate, South Carolina. In yet another sign of the highly competitive times in the healthcare industry, a group known as the Coalition for Quality Health Care has formed with the sole purpose of blocking the deal.
Under the name AGS System, the three systems are moving forward with their plans. They contend the deal is the best way to control healthcare costs in the region and blame competing hospitals for orchestrating local opposition to the transaction.
"They have a direct mail campaign, leaflets, newspaper ads and a telephone bank. You have to ask yourself, `Where is the money coming from?'*" said Joseph Oddis, president and chief executive officer of 448-bed Spartanburg (S.C.) Regional Medical Center, one of the three systems in the deal.
Answering his own question, Oddis said it's coming from Mary Black Memorial Hospital, Spartanburg's other acute-care facility, and St. Francis Health System in Greenville, S.C.
St. Francis' chief competitor, seven-hospital, 1,270-bed Greenville Hospital System, is part of the three-way deal. The third partner is 445-bed Anderson (S.C.) Area Medical Center, the sole acute-care facility in Anderson.
"We are a member of the coalition that opposes the creation of the AGS System, and the members are paying," said Carolyn Bobo, public relations director at St. Francis. "By blaming us, they're trying to divert attention away from the issues."
Bobo declined to disclose the amount of money St. Francis is devoting to the coalition's cause.
The cause is the derailment of the three-way partnership among Spartanburg Regional, Greenville Hospital System and Anderson Area. After months of discussions, the systems inked a proposed partnership agreement in February (Feb. 19, p. 14).
AGS System would be governed by an 11-member board. Each system would appoint three members to the board, and the nine members would appoint two community members. Although the three systems would maintain separate ownership, they would operate as a single organization controlled by the common board.
Last month, the systems inked a final agreement that must be approved by each system's respective governing board. Anderson Area's board approved the agreement on May 27. Greenville Hospital's board is set to vote on June 5, followed by a June 10 vote by the seven-member Spartanburg County Council, which oversees county-owned Spartanburg Regional.
After the systems approve the deal, they'll file for federal antitrust clearance, which the systems expect to receive, Oddis said. There's little overlap in the systems' geographic market, and enough economic efficiencies are generated by the deal to justify any increase in market share, Oddis said.
The systems say their mergerlike partnership could generate as much as $145 million in cost savings over the first five years of the deal.
And because they feel there's little antitrust risk, the systems won't be seeking an antitrust exemption under South Carolina's healthcare antitrust exemption law. Under the law, providers can seek antitrust clearance in exchange for certain restrictions on their business activities.
Oddis said he anticipates the deal closing by late fall.
But that won't happen if the Coalition for Quality Health Care has its way. Armed with its own public relations firm, the coalition announced its formation and opposition to the three-way partnership on May 20.
In addition to St. Francis and Mary Black, the coalition includes four community leaders, two physicians, three state legislators and four businesses.
The coalition says the partnership would give the three systems control of 81% of the inpatient beds in Anderson, Greenville and Spartanburg, as well as an eight-county monopoly over select inpatient services, such as open-heart surgery and neonatal intensive care.
The coalition says giving that much market share to, in effect, one corporation would limit consumer and business choice of providers, lead to higher prices and result in less access to services as AGS System looks for ways to achieve its promised cost savings.
"This deal would create a monopoly and lead to all the bad things that come along with a monopoly," said Gerald Landis, president of Mary Black. "The sole purpose is to dominate the healthcare market upstate."
After a failed attempt to merge with Spartanburg Regional, Mary Black is putting together a joint venture with Quorum Health Group of Brentwood, Tenn.
(r)ˆ»Both Landis and St. Francis' Bobo acknowledge their facilities are acting out of self interest as well as general concern for costs and access. They fear AGS would use its clout to exclude them from service contracts with insurers and businesses in the upstate market.
Just three months ago, St. Francis launched a separate public relations campaign to complain about being left out of a PPO sponsored by Blue Cross and Blue Shield of South Carolina (March 25, p. 70).
"It's just not the hospitals speaking out," Landis said. "There's tremendous opposition within the community."
The coalition is pursuing numerous strategies to thwart the deal, including running newspaper advertisements (See graphic, p. 20), stirring up local opposition to the deal before the June 10 public meeting of the Spartanburg County Council, and filing two separate lawsuits in state court.
The suits, filed by two state legislators, claim that neither county-owned Spartanburg Regional nor Greenville Hospital, which was created through an act by the state Legislature, can enter a partnership with a private corporation like Anderson Area.
Despite the commotion, there has been no word of interest by the U.S. Justice Department, Federal Trade Commission or state antitrust authorities in challenging the deal.