An antitrust challenge from the Federal Trade Commission has prompted Northern Virginias five-hospital Inova Health System to abandon plans to acquire Prince William Health System, which consists principally of 163-bed Prince William Hospital in Manassas, Va.
In similar statements, the systems blamed their decision on the challenge and unusual process changes by the FTC that threatened to prolong the merger by as much as two years.
David Wales, deputy director in the FTCs Bureau of Competition, called the outcome a victory for the residents of Northern Virginia and said he was puzzled by the notion that the FTCs procedural approach to the case would slow it down. In our view it would have done the exact opposite, Wales said.
In early May, the FTC filed an administrative complaint arguing the addition of Prince William Hospital would allow Falls Church, Va.-based Inova to squeeze managed-care payers for higher rates for inpatient services. A parallel complaint was filed in U.S. District Court in Alexandria, Va., seeking a preliminary injunction that would stall the transaction pending the outcome of the administrative case, the FTC's first hospital merger challenge since the landmark case against Evanston (Ill.) Northwestern Healthcare initiated in 2004.
In an unusual move characterized as a means to expedite the case, the FTC picked one of its commissioners, J. Thomas Rosch, to preside over it. Rosch rejected the systems request for him to recuse himself, and he also snubbed their efforts to delay the proceedings until the federal judge ruled on the injunction, instead ordering a detailed schedule for discovery leading up to an October trial date. Inova and Prince William had requested a hearing on the injunction in mid-July, and Wales said their decision to walk away now reflects the parties assessment of the strength of the evidence we have presented. -- by Gregg Blesch