Markets Wired

The U.S. Court of Appeals for the Sixth Circuit upheld a Federal Trade Commission Decision and Order that found ProMedica Health System’s acquisition of rival St. Luke’s Hospital was anticompetitive and likely would lead to higher prices for consumers in the Toledo, Ohio area. According to the Court of Appeals, “[t]he Commission’s analysis of this merger was comprehensive, carefully reasoned, and supported by substantial evidence in the record.”

“The Sixth Circuit’s decision affirming the Commission’s ruling is a victory for the residents of Lucas County, Ohio, and ensures that they will continue to benefit from competition,” said FTC Chairwoman Edith Ramirez. “As this decision demonstrates, the FTC’s vigilant enforcement of the antitrust laws in health care provider markets helps deliver lower cost, higher quality health care to consumers.”

The FTC staff challenged the acquisition in January 2011, alleging that the loss of competition would significantly harm patients, employers, and employees in the Toledo area by eliminating significant, beneficial competition between ProMedica and St. Luke’s through the creation of a combined hospital system with an increased ability to obtain supra-competitive reimbursement rates from commercial health plans, and, ultimately, from their members. In an Initial Decision, Chief Administrative Law Judge D. Michael Chappell ruled largely in favor of the FTC staff.

The Court of Appeals ruling upholds the Commission’s decision finding that ProMedica’s acquisition of St. Luke’s was likely to substantially lessen competition and increase prices for general acute-care inpatient hospital services and inpatient obstetric services sold to commercial health plans. In addition to agreeing with the Commission that the merger was anticompetitive, the Court of Appeals also upheld the Commission’s order requiring ProMedica to divest St. Luke’s to an FTC-approved buyer within 180 days after the order becomes final and effective.