Hospital mergers in Utah and New Jersey called off after FTC files complaints
Deals between HCA and Steward Health in Utah and RWJBarnabas and Saint Peter's in New Jersey should never have been proposed, FTC says.
Photo: Rusty Russell/Getty Images
HCA Healthcare and Steward Health Care System in Utah have abandoned plans to merge following a move by the Federal Trade Commission to block the deal.
The announcement – made by the FTC – comes two days after RWJBarnabas Health in New Jersey announced it had terminated its definitive agreement with Saint Peter's Healthcare System after the FTC blocked that proposal.
"For the second time in a week, parties who proposed an anti-competitive hospital merger have called their deal off after the FTC filed a complaint to block the deal," said FTC Bureau of Competition Director Holly Vedova of the HCA/Steward proposed merger. "This transaction, like the RWJBarnabas Health/Saint Peter's transaction that was abandoned two days ago, should never have been proposed in the first place."
Vedova continued, "This should be a lesson learned to hospital systems all over the country. …"
Neither HCA Healthcare nor Steward Health Care released statements.
RWJBarnabas CEO Barry H. Ostrowsky released this statement: "This difficult decision was not reached lightly. We are disappointed in the termination of the proposed transaction, which we believe would have transformed quality, increased access and decreased the overall cost of care for the people of this state through the creation of a premier academic medical center."
WHY THIS MATTERS
While health systems view mergers as a way to increase efficiencies in an increasingly competitive environment, the FTC has been cracking down on deals it deems as triggering a lack of competition in the geographic areas served.
"Had this transaction been allowed to proceed, it would have combined the second- and fourth-largest healthcare systems in Salt Lake City and the Wasatch Front region of Utah, resulting in higher prices, less innovation and lower-quality care for patients," Vedova said.
HCA Healthcare CEO Sam Hazen said at the time of the definitive agreement in 2021 that the addition of Steward's five Utah hospitals would help improve network options for patients and enable investments in services.
The RWJBarnabas/Saint Peter's deal got the go-ahead to integrate from the New Jersey Attorney General and was supported by grassroots community groups, employers, unions, managed care organizations and elected officials in the state, Ostrowsky said.
THE LARGER TREND
On June 2, the FTC voted 5-0 to file an administrative complaint to block the proposed transaction between HCA Healthcare and Steward Health Care System. The administrative complaint said it would reduce the number of healthcare systems offering inpatient general acute hospital services in the Wasatch Front region of Utah, increase market concentration significantly in already highly concentrated markets and eliminate Steward as a low-cost competitor.
The complaint against the New Jersey merger said that, in Middlesex County, in the central part of the state, the acquisition would harm competition for inpatient general acute care services.
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
