The Federal Trade Commission blasted a proposed sale of 182-bed Slidell (La.) Memorial Hospital to Tenet Healthcare Corp. last week, saying it could hurt consumers. Days earlier, the hospital's chief executive blamed physicians for weakening the hospital's position and said opponents of the sale have offered no viable alternative.
The barbs came days before voters were scheduled to go to the polls April 5 to approve or reject the sale of the ailing public hospital, which would create a monopoly. Tenet, Santa Barbara, Calif., owns the only other acute- care hospital in town, 147-bed NorthShore Regional Medical Center.
In a letter requested by Louisiana Attorney General Richard Ieyoub, the FTC said the deal would raise "serious competitive concerns." However, the FTC has not committed to challenging the deal, which it said remains under investigation. The sale is subject to approval by the attorney general.
The FTC said specialty facilities, such as Louisiana Heart Hospital, which opened in St. Tammany Parish in February, "do not appear to be adequate substitutes" for the two full-service hospitals in Slidell, and are unlikely to prevent Tenet from raising prices if it owns both hospitals. The heart hospital is owned by MedCath Corp., Charlotte, N.C.
Those remarks countered a statement issued days earlier by Slidell Memorial Chief Executive Officer Bob Hawley, who said management's decision to recommend a sale was a direct result of physician-owned specialty facilities. In response to anticompetitive concerns, Hawley said continued competition between two acute-care facilities would result in duplication of services, less resources for technology investment and vulnerability of full-service acute-care hospitals competing with physician-owned specialty facilities.
"The opposition criticizes Tenet for making profits and argues that selling (the hospital) to Tenet is anticompetitive. ... It should be remembered that the (sale) is driven by the emergence of new physician investor-based competition," Hawley said. The FTC also said the area is experiencing rapid growth and appears "well situated" to support two full-service hospitals.
But voters rejected a tax-supported bond issue for the hospital last year. Hawley said physicians opposed the hospital's attempt to partner with the not-for-profit Ochsner Foundation, New Orleans, because they felt a competitive threat.
In his statement, Hawley threatened immediate price increases if the deal is not approved. He said the hospital has at least $35 million in capital needs, while Tenet has committed to investing $40 million over five years.
Regarding Tenet's recent bad publicity, he said, "Many times, once a company has had bad press it tends to emerge as a better company."
-with Mark Taylor