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ProMedica v. FTC: Antitrust Concerns Prevent Hospital Merger

Posted in Recent Cases

In ProMedica Health System, Inc. v. FTC, the Sixth Circuit upheld the FTC’s decision to block ProMedica’s purchase of St. Luke’s hospital in Lucas County, Ohio.  A unanimous panel held that the merger would substantially lessen competition in the county’s highly concentrated market for primary and secondary case from four hospitals to just three.  ProMedica did not make any argument that the merger would increase efficiencies or produce benefits for the consumers—in fact, the St. Luke’s CEO stated that the merger could “harm the community by forcing higher rates on them.”  Nor did it challenge the FTC’s definition of the relevant geographic market.  Instead, ProMedica focused on its increased ability to negotiate with managed-care organizations and St. Luke’s weak pre-merger financial position.  The opinion roundly rejected those arguments and affirmed the FTC’s reliance on the increase in market concentration to create a presumption of illegality.  Because it relies heavily on the FTC’s market-concentration analysis, including the Herfindahl-Hirschman Index, this opinion will be felt most strongly in mergers in smaller markets in which only a handful of hospitals compete.