US Hospital Mergers

Mergers

The US Department of Justice sues four hospitals for an anticompetitive agreement in South-Central Michigan (Hillsdale / Branch / ProMedica / Allegiance)
Constantine Cannon (New York)
Antitrust Enforcers Sue Four Hospitals For Carving Up South-Central Michigan* The Antitrust Division of the U.S. Department of Justice and the Michigan Attorney General’s Office are suing four Michigan hospital systems for allegedly engaging in antitrust violations by agreeing to refrain from (...)

A US Attorney General launches a wide investigation into whether increasing consolidation among hospitals and physician groups may be resulting in supra-competitive prices for medical care
Sheppard Mullin (Los Angeles)
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Sheppard Mullin (Century City)
California Attorney General Becomes the Latest Antitrust Enforcer to Investigate Hospital/Doctor Group Combinations* California’s Attorney General has recently launched a broad investigation into whether increasing consolidation among hospitals and physician groups may be resulting in (...)

The US District Court of Detroit dismisses antitrust claims against practice of requiring hospitals to enter into "MFN-Plus" contracts (City of Pontiac / Blue Cross Blue Shield)
Sheppard Mullin (Los Angeles)
District Court Dismisses Follow-On Suit Challenging Blue Cross’s “MFN-Plus’ Contracts Under Both Per Se and Rule of Reason Standards* The District Court for the Eastern District of Michigan recently dismissed antitrust claims brought by the City of Pontiac against Blue Cross Blue Shield of (...)

A US Court of Appeals precludes tying claims brought by an hospital upholding the direct-purchaser rule under the Illinois Brick doctrine (Warren General Hospital/Amgen)
Wolters Kluwer (Riverwoods)
Illinois Brick Direct-Purchaser Rule Precludes Tying Claims by Hospital* The U.S. Court of Appeals in Philadelphia earlier this week reaffirmed the “bright-line” rule limiting federal antitrust standing to direct purchasers. The court upheld dismissal (CCH 2010-1 Trade Cases ¶77,043) of an (...)

A US Court of Appeals rules for an hospital holding that its campaign to block a potential rival does not violate s. 2 of the Sherman Act and is protected from antitrust liability under the Noerr-Pennington doctrine (Mercatus Group, Lake Forest Hospital)
Wolters Kluwer (Riverwoods)
First Amendment Rights Provide Antitrust Shield for Successful Petitioning to Block Potential Rival* How far can a competitor go in an effort to convince a local government to block a potential rival from setting up shop in its area without running afoul of the antitrust laws? Last week, the (...)

A US Court of Appeals follows a judicial trend applying the "attribution" test under s. 2 of the Sherman Act concerning bundled discounts in the healthcare sector (Southeast Missouri Hospital)
University of Pennsylvania (Philadelphia)
Are the Courts Moving Toward a Consensus on Bundled Discounts and §2 of the Sherman Act?* The Eighth Circuit’s recent decision in Southeast Missouri Hospital v. C.R. Bard, Inc., ___ F.3d ___, 2010 WL 3220600 (8th Cir. Aug. 17, 2010), aligns this Circuit with the Ninth Circuit’s decision in (...)

A US District Court dismisses based on the statute of limitations an antitrust complaint alleging a refusal to deal with a professional association of cardiologists expressed by an operator of five hospitals in Arkansas (Little Rock Cardiology Clinic / Baptist Health)
Sheppard Mullin (Los Angeles)
What Part of “No” Don’t You Understand? Unequivocal Refusal to Deal Triggers Statute of Limitations* Little Rock Cardiology Clinic v. Baptist Health, 573 F. Supp. 2d 1125 (E.D. Ark., August 29, 2008). Little Rock Cardiology Clinic (“LRCC”) is a professional association of cardiologists practicing (...)

The US District Court for the Northern District of Illinois Eastern Division denies preliminary injunction on the basis that geographic market analysis was erroneous in a hospital merger case (Advocate Health / NorthShore)
Constantine Cannon (Washington)
Geographic market definition trips up FTC as Federal Court rejects challenge to Advocate-NorthShore Hospital merger*The loss of the Federal Trade Commission (“FTC”) in a hospital merger case in the U. S. District Court for the Northern District of Illinois last week highlights just how tricky (...)

The US Court of Appeals for the Ninth Circuit provides significant judicial guidance for future health care mergers, casting serious doubt on the viability of a “post-merger efficiencies defense” to a prima facie case of a Section 7 violation (St. Luke’s Health System, Saltzer Medical Group)
Sheppard Mullin (Los Angeles)
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Sheppard Mullin (Century City)
In Highly-Anticipated Decision, Ninth Circuit Affirms That Hospital-Physician Group Merger in St. Luke’s Violated Section 7 And Casts Serious Doubt on Viability of Efficiencies Defense* On February 10, 2015, the Ninth Circuit issued its highly-anticipated decision at the intersection of health (...)

A US Court of Appeals upholds that the theory of harm articulated by the FTC in hospital merger cases is fully applicable to physician acquisition cases and that the positive impact on competition of the claimed efficiencies must be clearly demonstrated (St. Luke’s Health System, Saltzer Medical Group)
BakerHostetler (Washington)
“Oh help me, please doctor, I’m damaged”—What does the Future Hold for Hospital-Physician Acquisitions?* With the ink still drying on the Ninth Circuit’s opinion affirming the Idaho federal district court’s order requiring St. Luke’s Health System to unwind its acquisition of Saltzer Medical Group—a (...)

A US State Court rejects a proposed consent judgement for under-addressing the competitive harm (Commonwealth / Partners Healthcare System)
Simpson Thacher & Bartlett (New York)
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New York State Executive Chamber
Massachusetts Court Unsettles Partners’ Hospital Merger By Nixing Consent Judgment* A Massachusetts state court on Thursday derailed the settlement of a challenge to the proposed merger of Partners Health System with rivals South Shore Health and Educational Corp. (South Shore Hospital) and (...)

The US Sixth Circuit Court of Appeals strikes down Ohio hospital merger as anticompetitive (ProMedica Health System)
Norton Rose Fulbright (Washigton)
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Norton Rose Fulbright
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Norton Rose Fulbright (Austin)
Continuing the Federal Trade Commission’s (the FTC’s) string of wins in hospital merger cases, the United States Court of Appeals for the Sixth Circuit (the Sixth Circuit) upheld an FTC decision ordering the largest hospital provider in the Toledo, Ohio area to divest a smaller independent (...)

The US Court of Appeals for the Sixth Circuit confirms the decision of the FTC regarding a merger in the healthcare sector (ProMedica)
Skadden, Arps, Slate, Meagher & Flom (Washington)
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Skadden, Arps, Slate, Meagher & Flom (New York)
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General Electric (Washington)
On April 22, 2014, the United States Court of Appeals for the Sixth Circuit handed the Federal Trade Commission (FTC or Commission) another significant victory in a hospital merger, ruling that the FTC’s decision and order requiring that ProMedica divest St. Luke’s, another Lucas County, (...)

The United States District Court for the District of Idaho orders to unwind a hospital/physician group merger (St. Luke’s Health System / Saltzer Medical)
Paul Hastings (Washington)
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Paul Hastings (San Francisco)
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Paul Hastings (Los Angeles)
On January 24, 2014, the United States District Court for the District of Idaho ordered St. Luke’s Health System to unwind a merger with the Saltzer Medical Group. The outcome represented a significant victory for the various parties, including the Federal Trade Commission (“FTC”) and the State (...)

A US District Court orders the largest care system in Idaho to divest independent multi-specialty physician practice (St. Luke’s Health System / Saltzer Medical)
Wolters Kluwer (Riverwoods)
Combination of Idaho’s Largest Health System and Largest Physician Practice Must Be Unwound* Within the span of about two weeks, each of the federal antitrust agencies has been handed a major win in their merger enforcement efforts. Last Friday, it was the Federal Trade Commission’s turn. The (...)

The US FTC agrees to "unusual" remedy in hospitals merger case (Phoebe Putney Health System)
Jones Day (Washington)
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Jones Day (Washington)
The U.S. Federal Trade Commission has settled its long running dispute with the Phoebe Putney Health System, Palmyra Park Hospital, and the Hospital Authority of Albany-Dougherty County over the Hospital Authority’s acquisition of Palmyra in Albany, Georgia. Memorialized in a consent decree, the (...)

The US Supreme Court confirms the narrow scope of "State Action" doctrine (FTC v. Phoebe Putney)
Jones Day (Washington)
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Jones Day (Washington)
In FTC v. Phoebe Putney, the Supreme Court has unanimously reversed the Eleventh Circuit holding that a Georgia hospital authority’s acquisition of a hospital was covered by state-action immunity, emphasizing that "state-action immunity is disfavoured". The Supreme Court held that, as the State (...)

The US FTC jointly with the Pennsylvania Attorney General oppose proposed acquisition in the health care industry (RHS / SIR)
Sheppard Mullin (Los Angeles)
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Sheppard Mullin (Century City)
Large General Acute-Care Hospital Abandons Acquisition Of 15-Bed Surgical Specialty Center As A Result Of FTC Challenge* Just three days after the Federal Trade Commission, jointly with the Pennsylvania Attorney General, issued an administrative complaint challenging Reading Health System’s (...)

The US FTC announces consent agreement to address its concerns that a proposed acquisition would reduce competition in the provision of acute inpatient psychiatric services in three local markets (Universal Health Services / Psychiatric Solutions)
Skadden, Arps, Slate, Meagher & Flom (Washington)
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Skadden, Arps, Slate, Meagher & Flom (Palo Alto)
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Kirkland & Ellis (New York)
On November 15, the Federal Trade Commission (FTC) announced a proposed consent agreement to address the agency’s allegations that the $3.1 billion acquisition of Psychiatric Solutions, Inc. by Universal Health Services, Inc. (UHS) would reduce competition in the provision of acute inpatient (...)

The US FTC employs a creative remedy, requiring the offer of divestiture to determine the existence of a viable alternative purchaser, before approving the merger of acute care hospitals (King’s Daughters Hospital / Scott & White)
Cleary Gottlieb Steen & Hamilton (Cologne)
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Cleary Gottlieb Steen & Hamilton (Washington)
After a decade of what was perceived by many as relatively restrained merger enforcement, the Obama administration has repeatedly and vocally vowed to “reinvigorate antitrust enforcement” and to “take effective action to stop or restructure mergers that are likely to harm consumer[s]”. Many (...)

The US FTC requires an unusual method of testing for a less anticompetitive purchaser by offering the sale before completing the requisite due diligence, then clearing the merger in the acute care facilities industry (King’s Daughters Hospital / Scott & White)
Milbank, Tweed, Hadley & McCloy (New York)
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Jones Day
Healthcare reform and concerns about consolidation in the health care industry juxtaposed with continuing economic distress provided a fascinating backdrop for the Federal Trade Commission’s (FTC’s) recent investigation of Scott & White Healthcare’s consummated acquisition of King’s (...)

The US FTC dismisses merger challenge after parties publicly announced to abandon the proposed acquisition in the healthcare industry (Inova / PWHS)
Skadden, Arps, Slate, Meagher & Flom (Washington)
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Skadden, Arps, Slate, Meagher & Flom (New York)
Inova Health System Foundation (Inova) and Prince William Health System, Inc. (PWHS) announced today that they will abandon their proposed merger. This announcement comes after the Federal Trade Commission sought to preliminarily enjoin the merger so that it could conduct a “Fast Track” (...)

The US District Court for the Northern District of California hold that the State failed to establish prima facie case that a hospital merger would have anticompetitive effects (Sutter Health / Summit / Alta Bates)
Kentucky Department of Financial Institutions
The State of California brought suit against two hospitals claiming that the proposed merger would have anticompetitive effect in violation of Clayton Act. The State moved for preliminary injunction preventing merger from happening. Background: Defendants Summit and Alta Bates are hospitals (...)

The US Eighth Circuit Court of Appeals reverses a district court’s order enjoining the merger of two hospitals (Tenet Healthcare / Poplar Bluff Physicians Group)
Kentucky Department of Financial Institutions
The FTC filed a motion for a preliminary injunction to block the proposed acquisition of Tenet Healthcare and Poplar Bluff Physicians Group, doing business as Doctors’ Regional Medical Center, in Poplar Bluff, Missouri. The FTC alleged that the proposed merger of the only two general hospitals (...)

The US District Court for the Eastern District of New York allows the two largest most prestigious hospitals on Long Island to merge (Long Island Jewish Medical Center / Norton Shore Health)
Kentucky Department of Financial Institutions
The FTC brought antitrust action under Section 7 of the Clayton Act to prevent merger of two not-for-profit hospitals in Long Island, New York. The New York healthcare industry has experience significant changes prior to the proposed merger of the two hospitals. Further complicating the (...)

The US District Court hold that the government had failed to establish the geographic market, and therefore, failed to establish that a hospital merger would have anticompetitive effects (Mercy / Finley)
Kentucky Department of Financial Institutions
Mercy Health Center (Mercy) and Finley Hospital (Finley) are the only two general acute care hospitals in Dubuque, Iowa. The two hospitals agreed to merge and form a partnership, Dubuque Regional Health Services. On June 10, 1994, the government filed a complaint seeking injunctive relief (...)

The US Eighth Circuit Court of Appeals affirms a district court decision in concluding that the FTC’s proposed market definition for a hospital merger was an unreasonable approach (Freeman / Oak Hill)
Kentucky Department of Financial Institutions
The FTC brought suit seeking a preliminary injunction to prevent the merger of two hospitals in Joplin, Missouri, contending the transaction would have anticompetitive effects in violation of Section 7 of the Clayton Act. The City of Joplin, Missouri, a community of approximately 40,000 (...)

The US Eleventh Circuit Court of Appeals hold that a hospital’s decision to acquire a competing hospital in the same county was not vioaltive of the Clayton Act under the state action exemption to federal antitrust laws (Hospital Board of Directors of Lee County / Cape Coral Medical Center)
Kentucky Department of Financial Institutions
The FTC filed a complaint for a preliminary injunction and a temporary restraining order to prevent the Hospital Board of Directors of Lee County, a nonprofit public organization which owns and operates Lee Memorial Hospital, from acquiring the assets of Cape Coral Medical Center, Inc., which (...)

The Pennsylvania Attorney General negotiates creative consent decrees that allowed hospital mergers to be consummated in exchange for the merging parties agreeing to a number of conditions (Providence Health System / North Central Pennsylvania Health System)
Kentucky Department of Financial Institutions
In two hospital merger cases, the Pennsylvania Attorney General negotiated fairly novel and creative consent decrees, which permitted the mergers to be consummated in exchange for the merging parties agreeing to a number of conditions. These conditions included numerous provisions to protect (...)

The US 11th Circuit rejects the proposed acquisition of a nonprofit hospital of another area hospital (University Hospital / St Joseph Hospital)
Kentucky Department of Financial Institutions
The Federal Trade Commission (“FTC”) sought preliminary injunction to prevent defendants University Hospital and St. Joseph Hospital of August, Georgia from consummating a proposed asset acquisition agreement, alleging the proposed merger acquisition would violate Section 7 of the Clayton Act. (...)

The US Court of Appeals Seventh Circuit affirms lower court’s decision to enjoin proposed consolidation of nonprofit hospitals as violative of antitrust laws (RMC / SAC)
Kentucky Department of Financial Institutions
On September 27, 1987, Rockford Memorial Corporation (“RMC”), a not-for-profit corporation which owns and operates a general acute care hospital in Rockford, Illinois, and SwedishAmerican Corporation (“SAC”), a not-for-profit corporation which also owns and operates a general acute care hospital in (...)

The US District Court for the Western District of Virginia rejects the government’s attempt to stop a proposed merger of two not-for-profit hospitals (Carilion Health System / Community Hospital of Roanoke Valley)
Kentucky Department of Financial Institutions
The United States Justice Department (“DOJ”) filed suit to prevent defendants, Carilion Health System, a not-for-profit corporation which owns and operates Roanoke Memorial Hospitals, and Community Hospital of Roanoke Valley, a not-for-profit corporation which owns and operates Community Hospital (...)

The US FTC holds that a for-profit hospital chain’s acquisition of a competing hospital is in violation of § 7 of the Clayton Act and § 5 of the FTC Act (AMI / AMISUB)
Kentucky Department of Financial Institutions
American Medical International, Inc. (“AMI”) is a Delaware corporation engaged in the operation and management of proprietary hospitals in the United States and in foreign countries. AMI owns approximately 64 hospitals in the United States and abroad and it is the third largest proprietary (...)

Procedures

The US Supreme Court limits state-action immunity in hospital merger (Phoebe Putney Health System)
Paul Hastings (San Francisco)
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Paul Hastings (San Francisco)
On February 19, 2013, the Supreme Court visited a corner of the antitrust map that it last glimpsed during the Reagan Administration—the state action doctrine. The case that prompted this sojourn, FTC v. Phoebe Putney Health System, Inc., arose when a hospital authority in Albany-Dougherty (...)

The US Supreme Court decides a case interpreting the doctrine of state action immunity from federal antitrust liability (Phoebe Putney Health System)
University of Indiana - Maurer School of Law
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University of Indiana - Maurer School of Law
I. The State Action Doctrine State Action immunity from the application of U.S. antitrust law was established by the U.S. Supreme Court’s decision in Parker v. Brown. Based on principles of federalism and deference to state powers to structure their own economic policy, the doctrine allows (...)

The US Supreme Court narrows "State-Action" doctrine in hospital merger challenged by the US FTC (Phoebe Putney)
Skadden, Arps, Slate, Meagher & Flom (New York)
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Skadden, Arps, Slate, Meagher & Flom (Palo Alto)
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General Electric (Washington)
In a unanimous decision issued on February 19, 2013, the U.S. Supreme Court ruled that the state-action doctrine did not immunize Phoebe Putney Health System’s acquisition of Palmyra Park Hospital in Albany, Georgia. The decision immediately was hailed by FTC Chairman Jon Leibowitz as "a big (...)

The US Supreme Court unanimously rejects a Georgia state-sanctioned hospital authority’s claim that its acquisition of a competing hospital was immune from antitrust scrutiny under the state-action doctrine (FTC / Phoebe Putney)
Cleveland-Marshall School of Law
Phoebe Putney: A Quick Post-Mortem, and Some Thoughts on the Next Justice Stevens* I often feel a certain deflation after the Supreme Court decides an antitrust case. After watching a case for months, prognosticating about it with other antitrusters, reading umpteen blog posts, reading the (...)

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