FTC upholds order for ProMedica to divest St. Luke's Hospital
In a recent 4-0 vote, the Federal Trade Commission (FTC) made the decision to uphold Administrative Law Judge D. Michael Chappell’s December order for Toledo, Ohio-based Promedica to divest St. Luke’s Hospital in Maumee, Ohio.
According to Betsy Lordan, at the FTC Office of Public Affairs, the administrative complaint, which was issued in January 2011, alleged that ProMedica's acquisition of St. Luke's threatened to substantially harm competition and increase prices in two relevant service markets in Lucas County, Ohio. The two service markets include general acute-care inpatient hospital services and inpatient obstetrical services.
[Also: FTC takes steps to stop Inova acquisition of Prince William Health System]
In the general acute-care inpatient hospital services market, the commission alleged that the acquisition reduced the number of competitors in Lucas County from four to three, leaving ProMedica to face only Mercy Health Partners and the University of Toledo Medical Center, and giving it a market share approaching 60 percent, said Lordan.
On Aug. 31, 2010, ProMedica acquired control of St. Luke's, formerly an independent, not-for-profit general acute-care hospital pursuant to the terms of a Joinder Agreement that the parties had entered into several months earlier, said Lordan.
ProMedica is a non-profit healthcare system headquartered in Toledo, Ohio. Excluding St. Luke's, ProMedica operates three general acute-care hospitals in Lucas County, Ohio: The Toledo Hospital, Flower Hospital and Bay Park Hospital. It also provides healthcare services throughout northwestern and west-central Ohio and southeastern Michigan.
[Also: FTC opposes OmniCare's proposed takeover of PharMerica]
At the time of the acquisition, St. Luke's was widely recognized as a high-quality, low-cost hospital. Although ProMedica consummated the acquisition, it did so under a hold separate agreement designed to preserve St. Luke's as an independent competitor while the FTC investigated the potential anti-competitive effects of the transaction. Under the agreement, ProMedica agreed to refrain from certain actions – for example, terminating St. Luke's health-plan contracts, and eliminating, transferring or consolidating St. Luke's clinical services.
According to Lordan, having found liability, the FTC issued an order requiring ProMedica to divest St. Luke's to an approved buyer within 180 days of the date its order becomes final and effective. Under the order, ProMedica must meet certain conditions when it sells the hospital, including provide transitional services for up to one year after the sale and allow the new buyer to recruit St. Luke's employees so it can establish an independent, complete, full-service medical and hospital staff, she said.
The FTC may appoint a trustee to sell St. Luke's if ProMedica fails to do so by the deadline.
The FTC issued its Opinion and Final Order on March 22, meeting a self-imposed deadline designed to expedite the agency's administrative trial process. Under FTC Rules of Practice, which the Commission finalized in 2009, a final decision should be issued within 45 days after the case was argued before the Commission.
ProMedica can file a petition for review with a U.S. circuit court of appeals within 60 days of service of the Final Order.
Follow HFN Associate Editor Kelsey Brimmer on Twitter @kbrimmerhfn.
