Novant Health drops $320 million deal to buy two CHS hospitals

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Novant Health has dropped its bid to buy two Community Health System hospitals for $320 million, citing opposition from the Federal Trade Commission.

"Novant Health has worked tirelessly for more than a year to create a path forward for Lake Norman Regional Medical Center and Davis Regional Medical Center," a Novant Health spokesperson said in a statement. "Despite our vision to restore services the area has lost and deliver high quality, remarkable care, we have been met with opposition from the Federal Trade Commission at every step."

WHY THIS MATTERS

The FTC has been tireless in trying to stop a deal it argued would exceed its merger anticompetitive guidelines.

However, in his June 5 ruling allowing for the merger to move forward, U.S. District Court Judge Kenneth Bell said the purchase would likely increase competition against another large hospital system in the Charlotte metro area, Atrium Health. Atrium is building a new hospital, Atrium Lake Norman in Cornelius, North Carolina, which it plans to open in 2025.

Following that court decision, the FTC asked the U.S. Court of Appeals for the Fourth Circuit for an injunction to the merger, pending an appeal. 

On June 18, in a 2-1 decision, the appellate court issued the injunction. 

Dissenting Judge J. Harvie Wilkinson said the injunction could threaten the future of Lake Norman Regional Medical Center and Davis Regional Psychiatric Hospital. The lower court had said the merger could revitalize the hospitals, Wilkinson wrote. The lower court said Davis hospital may close and Lake Norman Regional's future is uncertain as well, he said.

"As the district court further noted, sending this back to the FTC and the administrative law judge is a process that ordinarily takes over two years," Wilkinson said. "Given the evidence I am not sure any financially hard-pressed healthcare facility would have that amount of time."

He added that while the FTC's ultimate success is "rather remote" the process would take two years.

"The FTC is acting too aggressively in this case, forgetting there is such a thing as a vibrant private sector," Wilkinson said.

THE LARGER TREND

In March, the FTC sued to block Novant's $320 million purchase of CHS hospitals, Lake Norman Regional Medical Center and Davis Regional Psychiatric Hospital.

ON THE RECORD

"We are steadfast in our belief that these facilities and their patients would have greatly benefited from joining Novant Health, but with the FTC's continued roadblocks we do not see a way to finalize this transaction," said the Novant spokesperson. "The communities served by these facilities deserve better than the fate they've been dealt by the FTC so we will look for other ways to support patients and clinicians in these communities."

Email the writer: SMorse@himss.org

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