FTC objects to acquisition of Memphis hospitals by Methodist Le Bonheur

16 November 2020 (Last Updated November 16th, 2020 12:57)

The Federal Trade Commission (FTC) in the US has objected to Methodist Le Bonheur Healthcare’s acquisition of Saint Francis Hospital – Bartlett and Saint Francis Hospital – Memphis in a deal valued at $350m.

FTC objects to acquisition of Memphis hospitals by Methodist Le Bonheur
If the proposed acquisition is consummated, it will lead to an increase in healthcare costs. Credit: fernando zhiminaicela from Pixabay.

The Federal Trade Commission (FTC) in the US has objected to Methodist Le Bonheur Healthcare’s acquisition of Saint Francis Hospital – Bartlett and Saint Francis Hospital – Memphis in a deal valued at $350m.

The FTC filed an administrative complaint and authorised a suit in federal court to block the proposed acquisition of the two hospitals which are owned by Tenet Healthcare.

In December last year, Methodist Le Bonheur signed a definitive agreement with Tenet Healthcare to purchase the hospitals.

The FTC argued that that the purchase by Methodist Le Bonheur would substantially lessen competition in the Memphis area for a range of inpatient medical and surgical diagnostic and treatment services.

If the proposed acquisition is consummated, it will lead to an increase in healthcare costs.

Furthermore, the incentive to expand service offerings, invest in technology, improve access to care, and focus on quality of health care provided in the area will come down.

The complaint also alleged that the acquisition would reduce the number of hospital systems currently providing general acute care services in the Memphis area from four to three.

With this, the combined health system will get control of about 60% of the Memphis-area market for general acute care services.

FTC Bureau of Competition deputy director Daniel Francis said: “Competition between hospitals helps keep prices down and quality high, and that’s as true in Memphis as it is elsewhere.

“It’s clear that patients in the Memphis area have benefitted from the competitive pressure that Saint Francis brings to bear on Methodist, through lower rates, more options for insurers and patients, and quality improvements. This transaction would take that competition away, and patients will pay the price.”

The complaint added that Methodist and Saint Francis are direct competitors as of now and the proposed acquisition would eliminate this competition.

It will also increase Methodist’s bargaining leverage with commercial insurers and allow it to negotiate higher reimbursement rates.

The complaint will be filed in the US District Court for the Western District of Tennessee seeking a Temporary Restraining Order and Preliminary Injunction to stop the deal pending an administrative trial that is scheduled to start on 18 May 2021.