The Federal Trade Commission on Thursday sued to block Novant Health’s planned $320 million acquisition of two North Carolina hospitals from Community Health Systems, alleging the deal could increase costs and reduce care quality.
In February, CHS and Novant signed a definitive acquisition agreement involving Lake Norman Regional Medical Center in Mooresville and Davis Regional Medical Center in Statesville, which is transitioning from an acute-care hospital to an inpatient behavioral health facility.
Related: Community Health Systems to exit North Carolina
If completed, the FTC alleges the proposed deal would allow Novant to control nearly two-thirds of the inpatient hospital market in the eastern Lake Norman area of North Carolina. Novant could allegedly demand higher reimbursement rates from commercial insurers, leading to higher premiums and copays, according to the commission. Less competition could also translate to fewer services and lower care quality, the FTC alleges.
“There is overwhelming evidence that Novant’s deal with Community Health Systems will be detrimental to patients in the eastern Lake Norman area, including leading to higher out-of-pocket costs for critical healthcare services,” Henry Liu, director of the FTC’s Bureau of Competition, said in a news release.
A Novant spokesperson said in a statement the nonprofit health system “will pursue available legal responses to the FTC’s flawed position,” and it “remains confident that Novant can bring exceptional care, leading-edge innovation and long-term stability to Lake Norman and Davis Regional.”
A CHS spokesperson said in a statement that a federal judge will “hear the case and make the final determination on whether the transaction can proceed,” and CHS “appreciates the professionalism of the medical staff, nurses and caregiving team as they continue to deliver quality care.”
Franklin, Tennessee-based CHS, which operates 71 hospitals in 15 states, has been selling hospitals since 2017 as it tries to stabilize financially. The system reported a $91 million net loss in the third quarter ended Sept. 30, more than double the $42 million loss in the year-ago period.
In December, CHS sold three Florida hospitals to Tampa General Hospital for $294 million. The for-profit health system in April sold its last West Virginia hospital, Plateau Medical Center in Oak Hill, to Vandalia Health in a $92 million deal. If the proposed sale with Novant goes through, CHS would no longer have any hospitals in North Carolina.
Meanwhile, Novant is looking to expand its 16-hospital footprint. Winston-Salem, North Carolina-based Novant plans to buy three South Carolina hospitals from Dallas-based Tenet Healthcare Corp. for $2.4 billion. That proposed acquisition is expected to close before April.
