FTC sues to block merger between HCA Healthcare and Steward Health Care System
Eliminating Steward as a low-cost competitor would enable HCA to command higher reimbursement rates, FTC says.
Photo: Rusty Russell/Getty Images
Calling the health systems rival competitors in Utah, the Federal Trade Commission has brought an administrative complaint and a lawsuit in federal court to block the proposed merger between HCA Healthcare and Steward Health Care System.
The agency said the deal would eliminate the second- and fourth-largest healthcare systems in the Wasatch Front region, where approximately 80% of Utah's residents live.
HCA Healthcare and Steward Health Care System – both for-profit systems – compete for inclusion in insurer networks and for healthcare quality, service lines, and nurse and physician recruitment, the FTC said.
The complaint also names Steward's CEO and controlling majority shareholder, Dr. Ralph de la Torre.
HCA is a Nashville, Tennessee-based system with 182 hospitals in the U.S. and abroad. Steward, headquartered in Dallas, Texas, has 41 hospitals in the U.S. and abroad.
The commission vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 5-0. The federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the District of Utah to halt the transaction pending an administrative proceeding, the FTC said. The administrative trial is scheduled to begin December 13.
WHY THIS MATTERS
HCA Healthcare announced a definitive agreement to acquire the operations of Steward Health Care's five Utah hospitals in September 2021. It also entered into an agreement to lease the related real estate from the owner following the closing.
The hospitals were slated to become part of HCA Healthcare's Mountain Division, which includes hospitals in Utah, Idaho and Alaska.
No monetary amount for the acquisition was announced.
HCA Healthcare CEO Sam Hazen said at the time that the addition of these facilities would help improve healthcare network options for patients and enable investments in services.
But the FTC contends that the acquisition would reduce the number of healthcare systems offering inpatient general acute care hospital services. In some Utah markets, the reduction would be from three competitors to two, and in another, from four competitors to three, the FTC said.
The deal would increase market concentration in an area in which inpatient general acute care hospital services sold to commercial insurers and their members are already concentrated, the FTC said.
Eliminating Steward as a low-cost competitor would enable HCA to command higher reimbursement rates, which commercial insurers would likely pass on as increased premiums, deductibles, co-pays and other out-of-pocket expenses, the FTC said.
THE LARGER TREND
The vast majority of deals reviewed by the FTC and the Department of Justice are allowed to proceed after the preliminary review, the FTC said of its merger review.
The FTC shares jurisdiction over merger reviews with the Department of Justice.
They have blocked several high-profile deals recently, including between Hackensack Meridian Health and Englewood Healthcare Foundation; between UnitedHealth Group and Change Healthcare; and in a suit announced yesterday, between RWJBarnabas Health and Saint Peter's Healthcare System.
Steward and HCA have recently made M&A deals.
On Wednesday, Steward announced that CareMax, a technology-enabled provider, would acquire the Medicare value-based care business of Steward.
In April, Steward announced it had acquired Abrazo Mesa Hospital in Arizona for a fifth facility in that state.
HCA Healthcare announced Thursday it has finalized its acquisition of BetterMed Urgent Care and its 12 clinics in Virginia, according to RichmondBizSense. Terms of the deal weren't disclosed.
ON THE RECORD
"As the second- and fourth-largest healthcare systems in the Wasatch Front region of Utah, which surrounds Salt Lake City, HCA Healthcare and Steward Health Care System help to keep costs down for consumers by competing vigorously with each other," said FTC Bureau of Competition Director Holly Vedova. "The result is lower prices and more innovative services for patients and their families. If these companies merge, this competition will be lost, and Steward will no longer be available to patients as a low-cost provider in this region."
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
