Mountain States, Wellmont boards approve systems' merger

The boards of Mountain States Health Alliance and Wellmont Health System voted unanimously to approve their merger, according to a financial filing issued Thursday. The new 21-hospital system serving northeast Tennessee and southwest Virginia was rebranded as Ballad Health.

Both Tennessee and Virginia approved the organizations' certificate of public advantage last year, which essentially allowed them to skirt challenges from federal regulators in favor of 10 years of state oversight while the companies integrate. COPAs are used to demonstrate that a merger's public benefit outweighs potential anti-competitive consequences.

The Federal Trade Commission opposed the merger, saying the organizations hadn't shown that the deal's benefits would outweigh any competitive harm from the "near-monopoly." Economists warned that the systems' combined market power would inflate prices. Federal regulators generally oppose the use of certificate of public advantage statutes, questioning whether ongoing state supervision will be sufficient.

The health systems' executives said they would use more than $200 million of the savings from more efficient operations to combat public health issues like obesity as well as provide mental health counseling, addiction treatment, managed-care services and pediatric specialty centers.

Competition between the neighboring systems has failed to benefit patients in southwest Virginia; patients there have limited access to services that yield lower margins, and thus, there's less incentive for the providers to expand those service lines, the organizations said. Without the opportunity to join forces to care for one of the poorest and sickest regions in the country, they would be forced to sell their assets to a larger system that would likely close hospitals, they said.

Alan Levine, former president and CEO of Mountain States Health Alliance, is now the executive chairman, president and CEO of Ballad Health.