A pair of West Virginia hospitals that merged using a state law that allowed them to fend off a federal antitrust lawsuit now plans to scoop up a prominent physician group.
Cabell Huntington Hospital acquired the only other acute-care hospital in Huntington, St. Mary's Medical Center, in 2018 in a $165 million transaction that was opposed by the Federal Trade Commission. Now, St. Mary's has announced plans to buy Huntington Internal Medical Group, a multi-specialty practice in Huntington with more than 60 physicians, physician assistants and nurse practitioners. The deal would need approval under West Virginia's Certificate of Need program.
Cabell Huntington employees who are represented by the union SEIU District 1199 are protesting the move. Joyce Gibson, regional director for SEIU District 1199, said the deal would create a monopoly.
"In the city of Huntington, you only have two hospitals and then you have HIMG, which they just did a Certificate of Need to purchase," she said. "So yes, definitely, they will own healthcare in the city of Huntington."
The union, which represents about 2,300 nurses, maintenance and technology employees at Cabell Huntington, said the hospital cut employees' health benefits after the merger due to a stated lack of resources. Gibson said under the change, nurses' monthly premiums went from zero dollars to upwards of $600. Now, the health system plans to spend $10.5 million on capital expenditures related to the proposed acquisition.
Gibson said some St. Mary's employees are trying to join SEIU District 1199, but are being intimidated by management.
A St. Mary's spokeswoman declined to comment. A Cabell Huntington spokeswoman referred an inquiry to St. Mary's. The hospitals are part of a not-for-profit health system called Mountain Health Network.
The Federal Trade Commission originally filed a complaint challenging Cabell Huntington's purchase of St. Mary's but dropped it when state lawmakers approved a law that shielded such deals from federal antitrust scrutiny. The agency warned it would result in "substantial risk of serious competitive harm" and would likely result in higher healthcare costs and lower quality, given that the two hospitals compete "vigorously" on price and "intensely" on quality and service.
Tim Greaney, a UC Hastings College of Law professor who studies certificates of public advantage, the type of law that allowed the Cabell merger, said if state regulators were serious about enforcing the COPA, they would scrutinize vertical mergers between hospitals and physician groups.
"There are a lot of economic studies that show that hospital acquisitions of physician practices are prone to increasing costs and not improving quality," he said.
The percentage of primary care physicians and specialists whose practices were owned by hospitals and health systems doubled between 2010 and 2018, according to a Health Affairs article Greaney co-authored in April.
Some have predicted that the financial crunch the COVID-19 pandemic has placed on physician practices' finances will drive many to pursue buy-outs. It's unclear whether that pressure is behind this deal. A call to HIMG was not returned Friday.
Mike Mullins, CEO of Mountain Health Network, the system that includes the two hospitals, said in a statement that he realizes an acquisition during the COVID pandemic is unexpected.
"While this is a difficult economic time, both boards recognize the acquisition is an important investment for our region's future and are committed to bringing it to fruition," he said.
Mullins said the deal will help the health system recruit physicians and give them the opportunity to work in an academic setting, private practice or both.
A Mountain Health Network news release announcing the proposed deal said that St. Mary's would file an application with the West Virginia Health Care Authority to review the transaction under its Certificate of Need process.
The state will determine whether the proposed project is needed in the service area and whether the applicant addressed all the required standards, Jessica Holstein, a spokeswoman for the West Virginia Department of Health & Human Services wrote in an email. The board will also consider whether there are better alternatives in terms of cost, efficiency and appropriateness, whether patients will experience problems getting care if the deal isn't approved and whether it is financially feasible.
Some COPAs regulate hospital revenue but not that of other providers, which could allow a health system under a COPA to potentially over the market power of other providers, said Christopher Garmon, assistant professor of health administration at the University of Missouri-Kansas City. Garmon has studied COPAs, but was not familiar with Cabell Huntington's.
"If one service is regulated and another is not, the market power they have gotten through this merger, they could exercise that in the unregulated service," he said.