After a five-month investigation, the Federal Trade Commission has cleared the proposed acquisition of 420-bed Summit Medical Center in Oakland, Calif., by Sacramento, Calif.-based Sutter Health, according to the companies.
In a July 2 written statement, Summit and Sutter said they "were moving ahead with final plans" toward completing the deal. Sutter intends to merge Summit's operations with those of its 555-bed Alta Bates Medical Center, three miles east of Oakland in Berkeley.
Under the terms of the transaction, first announced in March 1998, a 23-member board of directors would govern the two hospitals.
Officials involved with the transaction have not predicted a closing date or disclosed a purchase price.
Sutter and Summit are moving forward with their plans despite the fact that they're still awaiting a formal clearance letter from the FTC.
Sutter spokesman Bill Gleeson confirmed his system had not received a closure letter from the FTC but added "we were informed orally that the FTC would not be going to court to block the merger."
An FTC source said last week that the customary letter announcing the close of its antitrust investigation has yet to be issued.
The deal would give control of two of the East Bay's largest hospitals to Sutter, which owns 21 hospitals in Northern California and one in Hawaii. Sutter would command as much as a 44% market share of the suburbs immediately east of Oakland. And if Kaiser Permanente closed its 264-bed hospital in Oakland and sent its acute-care patients to Summit, Sutter would have as much as a 58% market share, according to a recent study by the San Francisco Chronicle.
The hospitals also are waiting for final approval from the California attorney general's office, which has been conducting its own antitrust investigation of the proposed consolidation of Summit and Alta Bates.
John Donhoff, the deputy California attorney general in charge of the state's antitrust investigation, confirmed last week that his office "has concerns about the anti-competitive nature of the transaction." He declined further comment.
The attorney general's office held a public hearing on the merger March 11 and could request modifications or even sue to block the deal.
Summit and Alta Bates officials say a merger is justified in part because it would stem their losses.
Summit lost $13.5 million for the fiscal year ended Feb. 28, while Alta Bates lost $5.6 million during 1998, according to financial results they publicly released late last month.
Sutter's longtime labor foe, Oakland-based Service Employees International Union Local 250, says it is concerned about a potential monopoly by Sutter and said it would lobby the attorney general's office to block the transaction.