FTC reluctantly backs Phoebe Putney merger, limits hospital's expansion
The agency had argued that the $195 million takeover violated federal antitrust laws and greatly reduced competition in southwest Georgia.
Photo of Phoebe Putney North in Albany, Georgia from Google.
A long anti-competition saga is coming to an end Georgia after the Federal Trade Commission this week said the 248-bed hospital formerly known as Palmyra Medical Center in Albany, Georgia, will remain a part of Phoebe Putney Health System. However, the nonprofit healthcare system will be subject to oversight by the FTC and face limitations on its expansion.
In 2010, the FTC challenged Phoebe Putney’s decision to acquire its chief rival, Palmyra Medical Center, from the Hospital Corporation of America. The agency argued that the $195 million takeover violated federal antitrust laws and greatly reduced healthcare competition in the southwest Georgia.
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Phoebe Putney, publicly owned by the Hospital Authority of Albany-Dougherty County, went ahead with the acquisition in 2011, renamed Palmyra as Phoebe North and appealed the FTC’s suits. Although the FTC largely succeeded in the courts, it turned out that Georgia’s certificate of need law made it too complex for the acquisition to be unwound.
“While it would have been the most appropriate and effective remedy to restore the lost competition in Albany and the surrounding six-county area from this merger to monopoly, Georgia’s certificate of need laws and regulations unfortunately render a divestiture in this case virtually impossible, leading us to accept this less-than-ideal remedy,” the FTC wrote in a statement.
Under the consent agreement, Phoebe Putney and the Hospital Authority will notify the FTC in advance of acquiring any part of a hospital or controlling interest in other providers in the region for the next 10 years, as well as abstaining for the next five years from challenging any applications by rival health organizations open a new general acute care hospital.
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The settlement also contains a provision for Phoebe Putney and the Hospital Corporation to stipulate that the “effect” of the acquisition “may be substantially to lessen competition within the relevant service and geographic market,” an admission that could possibly open the health system to lawsuits if health insurers or patients conclude that prices are being raised excessively.
“The settlement is something we can easily live with,” Phoebe Putney CEO Joel Wernick said at a news conference covered by the Albany Herald. The costs of the legal dispute have been a concern, though, with the tab being “at least seven figures and headed toward eight,” he said. “While the attorneys earned every nickel, we would have just as soon have spent the hourly rates” on Phoebe employees and patient care.
Going forward, Phoebe Putney is looking to grow its physicians, and expand at Phoebe North, the former Palmyra hospital. Among the options are new women’s and children’s services, education programs and career training, and additional low intensity emergency services, to eventually become a Level 2 trauma center. The health system will also partner with Geisinger Health System and its xG Health Solutions to adopt best clinical practices.
Twitter: @AnthonyBrino
