Dive Transient:
The Federal Commerce Fee says Novant Well being’s proposed buy of two Neighborhood Well being Methods hospitals would “irreversibly consolidate” the hospital market within the northern suburbs of Charlotte, North Carolina, stifling competitors and driving up costs.
The proposed $320 million transaction would add Lake Norman Regional and Davis Regional Medical Middle to Novant’s portfolio. The antitrust company sued to dam the deal in January.
In a courtroom memo filed publicly Monday, the FTC sought a preliminary injunction to bar the sale from persevering with. The company alleged the deal would grant Novant an “eye-popping” 64% share of the market and was thus “presumptively illegal.” The Supreme Court docket beforehand held mergers that resulted in a single entity controlling 30% of the market, based on the submitting.
Dive Perception:
Novant Well being is likely one of the largest well being programs within the southeastern U.S., with 19 medical facilities and over 850 outpatient areas throughout the Carolinas. Six of its hospitals are within the better Charlotte market, based on the courtroom paperwork.
Its whole income was $7.6 billion in 2022, based on paperwork filed by the FTC.
The nonprofit well being system has grown by a collection of mergers, based on the courtroom paperwork filed Monday. Final month the well being system closed its most up-to-date deal to buy three South Carolina hospitals from Tenet Healthcare for roughly $2.4 billion.
Novant now seeks to buy Davis Regional and Lake Norman Regional — the latter of which sits simply 12 miles down the highway from Novant’s Huntersville facility. Novant and CHS executives think about the Lake Norman and Huntersville hospitals to be “shut rivals,” based on the preliminary injunction.
The proposed deal would “instantly wipe out this competitors, lowering defendants’ incentives to put money into high quality care and leaving fewer choices for sufferers,” warned the FTC.
The antitrust company argued the deal may additionally improve Novant’s leverage over insurers, permitting the system to barter greater charges. In flip, particular person well being plan members may expertise greater premiums and out-of-pocket prices because of the deal. The FTC estimated the proposed transaction would improve shopper costs by roughly 18% at Lake Norman Regional and 4% at Novant Huntersville.
In an announcement to Healthcare Dive final month, a Novant spokesperson stated the well being system deliberate to defend the deal and “pursue obtainable authorized responses to the FTC’s flawed place.”
Novant has pointed to Atrium Well being’s deliberate 2025 opening of a 30-bed hospital in Cornelius, North Carolina, as proof that competitors will stay within the area after the deal. Nevertheless, the FTC slammed that assertion, stating, “defendants can not come near demonstrating new hospital entry or growth within the related geographic market would offset the overwhelming proof of this deal’s anticompetitive results.”
The company added that Novant’s purported high quality enhancements on the hospitals amounted to unspecific “hand-waved aspirations,” that could possibly be achieved with out a merger.
An evidentiary listening to within the case is slated for April 29.
Hospital mergers and acquisition exercise elevated in 2023, with a median deal dimension — measured by the scale of the smaller occasion — of $591 million, based on a January report from Kaufman Corridor.
Regulator scrutiny of offers rose as effectively.
In December, the Division of Justice and the FTC issued the primary significant replace to merger steerage in additional than a decade to provide regulators extra energy to evaluate vertical and cross-market offers, in addition to non-public fairness “roll-ups” of a number of corporations.
John Muir Well being’s proposed $142.5 million buy of Tenet Healthcare’s San Ramon Regional Medical Middle fell aside in December after the FTC sued to dam the transaction, citing antitrust considerations.
Consultants predict that extra well being system tie-ups will face FTC evaluate and doable litigation this 12 months.
Nevertheless, Peter Blau, managing companion of healthcare companies and options at DHR World, stated well being programs are unlikely to be dissuaded from pursuing mergers and acquisitions.
“They’re having problem recruiting workers, each medical and nonclinical executives. They’re experiencing reimbursement challenges,” Blau stated. “So for lots of those amenities, it’s a really difficult time. It’s very engaging for them to exit and discover companions that may permit them to live on and serve the group.”
He known as regulators’ renewed efforts to manage such offers a catch-up effort, akin to making an attempt to cease a “ball that’s already rolling downhill.”
