Capella owns a competing hospital in Hot Springs, 181-bed National Park Medical Center, and the company noted at the time that completing the deal would depend on clearance from federal antitrust authorities, as well as the Vatican.
FTC Competition Director Richard Feinstein said in a statement that his staff had informed Capella and Mercy that the government had “serious concerns about the likely anticompetitive harm” and that the FTC was “prepared to challenge the transaction.”
In their news release announcing the deal was over, the organizations said bringing together the two Hot Springs hospitals under Capella was intended to yield a “stronger, more unified healthcare system” that could compete with larger providers a short distance away in Little Rock, Ark.
Feinstein, though, said the FTC had gathered testimony, documents and input from economics experts suggesting the acquisition would lead to higher prices and “diminished healthcare service” in Hot Springs.
The purchase agreement called for Capella to pay $167.5 million for Mercy Hospital Hot Springs, according to the FTC.
The FTC's success in stopping the transaction adds to a string of victories in hospital merger cases.