FTC Dismisses Complaint Challenging Merger of Cabell Huntington Hospital and St. Mary’s Medical Center

The Federal Trade Commission has voted to dismiss without prejudice its administrative complaint challenging the proposed merger between Cabell Huntington Hospital and St. Mary’s Medical Center – two hospitals located three miles apart in Huntington, West Virginia.

The FTC’s administrative complaint, issued in November 2015, alleged that the proposed merger violated U.S. antitrust law. The Commission voted to dismiss the complaint in light of the passage in March 2016 of a new West Virginia law relating to certain “cooperative agreements” between hospitals in that state, and the West Virginia Health Care Authority’s decision to approve a cooperative agreement between the hospitals, with which the West Virginia Attorney General concurred. Cooperative agreement laws seek to replace antitrust enforcement with state regulation and supervision of healthcare provider combinations.

“This case presents another example of healthcare providers attempting to use state legislation to shield potentially anticompetitive combinations from antitrust enforcement,” the Commission wrote in a statement. “The Commission believes that state cooperative agreement laws such as SB 597 are likely to harm communities through higher healthcare prices and lower healthcare quality.”

The Commission statement notes that proponents of cooperative agreement laws claim that antitrust enforcement undermines the policy goals of the Affordable Care Act to improve quality and lower costs through greater coordination among healthcare providers. “This is fundamentally incorrect,” the Commission wrote. “The ACA did not repeal the antitrust laws, and it certainly does not condone mergers that substantially lessen competition.”

The Commission further states, “we will continue to vigorously investigate and, where appropriate, challenge anticompetitive mergers in the courts and, if necessary, through state cooperative agreement processes. Our decision to dismiss this complaint without prejudice does not necessarily mean that we will do the same in other cases in which a cooperative agreement is sought or approved.”

The Commission vote to approve the Commission statement and withdraw the administrative complaint was 3-0.  

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