The U.S. Justice Department is conducting an antitrust investigation of the proposed sale of a managed-care subsidiary of HCA, until recently called HCA-The Healthcare Co., to First Health Group Corp.
The Justice Department has made a second request, under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, for information about First Health's proposed $195 million acquisition of CCN, San Diego. The government's antitrust query could threaten the deal or at least push back the original July time frame for completing the sale. Typically, such requests for additional information signal an investigation of a merger's potential anticompetitive effects.
Joseph Whitters, chief financial officer of First Health, Downers Grove, Ill., said that once the government has all of its facts, "we're hopeful we'll be able to move forward with the transaction." He said both companies provide managed-care services in "practically every state."
CCN provides coverage to about 32 million people through nonrisk plans that include workers' compensation, group health and automobile injury management. First Health provides employers with group health and workers' compensation products.
The two companies first announced their definitive agreement May 21 and filed premerger documents on June 1. The government requested the additional information on July 2 at the close of a 30-day waiting period after the filing.
Jeffrey Prescott, spokesman for HCA, said such second requests were "not uncommon," and that HCA and CCN would provide the information to the Justice Department.
Blaine Faulkner, senior vice president of strategic planning and development for CCN, declined to discuss the nature of the government's questions.
"We're just trying to go through the request this week," he said.
First Health has said it expected to complete the purchase of CCN this month. HCA acquired CCN through its 1997 acquisition of Avon, Conn.-based Value Health and wanted to divest the line of business to focus on its acute-care hospitals. As part of the tentative deal, First Health agreed to add all of HCA's hospitals, surgery centers and employed physicians to its national provider network for 21/2 years.
The government's second request extends the waiting period imposed by the antitrust statute until 30 days after First Health and CCN provide the government with the requested information, unless both parties agree to extend the period or the FTC terminates the period.