The Federal Trade Commission will sue to block John Muir Health’s proposed $143 million acquisition of San Ramon (California) Regional Medical Center, alleging that it would increase costs and lower care quality.
In January, Walnut Creek, California-based John Muir signed a definitive agreement to acquire San Ramon Regional from Tenet Healthcare Corp., a majority owner of the hospital also located in the East Bay near San Francisco. Tenet, a 61-hospital, for-profit health system based in Dallas, has a 51% interest in San Ramon Regional. John Muir, a nonprofit health system that operates two hospitals, owns a 49% non-operating stake in the acute- care hospital.
Related: FTC opposition ends another hospital deal
In a complaint to be jointly filed by the FTC and California Attorney General’s Office, regulators allege that the proposed transaction would allow John Muir to raise prices for inpatient acute-care services across its network, leading to higher insurance premiums and out-of-pocket costs for patients, according to the FTC. If the proposed acquisition goes through, John Muir would allegedly control more than 50% of the market for inpatient acute-care services sold to commercial insurers, potentially reducing the incentive to improve care quality, the FTC claims.
A spokesperson for John Muir said the health system is disappointed by the FTC’s decision, and that it is considering a legal challenge, among other options. The acquisition would allow John Muir to improve San Ramon’s electronic health record, boost care quality and add services, the spokesperson said.
Tenet did not immediately respond to a request for comment.
The FTC voted unanimously Friday to file the administrative complaint in the U.S. District Court for the Northern District of California, seeking a preliminary injunction to halt the deal, according to a news release.
