The Federal Trade Commission has filed an administrative complaint and authorized a suit in federal court to block the proposed $350 million acquisition by Memphis-based Methodist Le Bonheur Healthcare of the two Memphis-area Saint Francis hospitals owned by Dallas-based healthcare system Tenet Healthcare Corporation.
The complaint alleges that the proposed acquisition would substantially lessen competition in the Memphis area for a broad range of inpatient medical and surgical diagnostic and treatment services that require an overnight hospital stay. According to the complaint, if the proposed acquisition is consummated, healthcare costs will rise, and the incentive to expand service offerings, invest in technology, improve access to care, and focus on quality of health care provided in the Memphis area will diminish. The FTC says only four hospital systems currently provide general acute care services in the Memphis area.
The complaint alleges that the proposed acquisition would reduce that number to three, giving the combined health system control of approximately 60 percent of the Memphis-area market for general acute care services. Only one other major hospital system, Baptist Memorial Health Care, would meaningfully constrain the combined health system; the fourth system in the area, Regional One, is smaller and focuses on a different patient population, the FTC complaint says.
“Competition between hospitals helps keep prices down and quality high, and that’s as true in Memphis as it is elsewhere,” said Daniel Francis, Deputy Director of the FTC’s Bureau of Competition. “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.”
In response to the FTC’s action, a joint statement was issued by Sally Hurt-Deitch, CEO of Saint Francis Healthcare, and Michael Ugwueke, president and CEO of Methodist Le Bonheur:
“Our joint commitment has always been to improve healthcare delivery for the residents of Memphis, Bartlett and the surrounding communities, including enhancing access to care, cutting-edge medical technology and the highest quality physicians and staff. Our two organizations promote a culture of compassion backed by strong core values, which together, we believe will have an even greater impact on care delivered in these communities. We are reviewing this recent action by the FTC and actively considering next steps. We are surprised by the FTC action given the strong support for the transaction by local stakeholders, including leading local health plans, physicians, employers, and community leaders and the evidence that the transaction will lead to lower prices, improved quality, and enhanced access to care for Memphis-area patients.”
