One year after the Federal Trade Commission announced it would review previously consummated hospital mergers, the antitrust regulatory agency has yet to announce an enforcement action.
Speaking earlier this month at the American Bar Association's spring meeting in Washington, Michael Cowie, assistant director of the FTC's Bureau of Competition, vowed to finish the look-back reviews within the next few months. Speaking at the same meeting, FTC Chairman Timothy Muris confirmed the inquiry is winding down.
"Within a few months we would like to either bring an enforcement action or close an investigation on several matters and intend to move promptly forward," Cowie said.
Health lawyers close to the inquiry said the FTC is exploring at least six consummated mergers of hospitals, including those of hospitals in Poplar Bluff, Mo.; Waukegan and Highland Park, Ill.; and Wilmington, N.C., as well as several others in undisclosed communities.
Muris said the review's purpose was to determine whether the mergers were anticompetitive, delivered on promised efficiencies and resulted in price increases; the FTC also hoped to forge a new legal framework for challenging anticompetitive mergers. Neither the FTC nor the antitrust division of the U.S. Justice Department has challenged a hospital merger since 1998, and the two agencies lost all eight of their hospital merger cases since the mid-'90s.
Cowie said 15 FTC attorneys and economists have worked full time on the retrospective merger study since August, and the agency has learned much about geographic market analysis, health system competition and merger efficiencies. Cowie refused to identify any potential merger challenges, but healthcare antitrust attorneys said the commission plans to challenge at least one.
Healthcare antitrust attorneys and hospital officials said the FTC sought volumes of patient records and economic and contracting data from the hospitals, managed-care organizations and employers.
David Loveland, a senior vice president with Evanston (Ill.) Northwestern Healthcare, said the three-hospital not-for-profit system hasn't had contact with the FTC since January. Last year, the FTC confirmed it was investigating the 1999 merger between Highland Park Hospital and Evanston Hospital.
Bill Atkinson, president and CEO of New Hanover Regional Medical Center in Wilmington, said there seems to be no end in sight to the FTC information requests relating to the 1998 purchase of 109-bed Cape Fear Memorial Hospital, also in Wilmington, by the county-owned New Hanover.
"At this point I'd guess we've sent 15,000 pages of material, and I'd be scared to estimate the legal costs," Atkinson said, noting lawyer bills alone have exceeded six figures. "They have been very broad information requests with no real rhyme or reason. Our counsel has been in contact with the FTC almost every day. ... We have been openly cooperative, but it's all coming out of our pockets and will get passed on to consumers. As best we can tell this has been an education process for the FTC for which we're the source of free textbooks."
Tenet Healthcare Corp. spokesman Harry Anderson said the FTC inquiry into its Poplar Bluff hospitals is no longer a high company priority since Tenet announced it would divest them. Anderson said Tenet complied with the FTC's information requests.
"In our view this is not an ongoing, front-burner thing for the FTC either," he said. %