FTC Challenges Carilions Acquisition of Outpatient Medical Clinics

The Federal Trade Commission has issued an administrative complaint challenging Carilion Clinic’s 2008 acquisition of two outpatient clinics in the Roanoke, Virginia, area. Prior to the acquisition, the Center for Advanced Imaging (CAI) and the Center for Surgical Excellence (CSE) had strong reputations for offering high-quality care and convenient services at prices much lower than Carilion’s.

The complaint alleges that Carilion’s acquisition of these outpatient centers eliminated this vital competition in violation of federal antitrust laws, and will lead to higher health care costs and reduced incentives to maintain and improve service and quality of care for patients in the Roanoke area. The complaint seeks divestiture of these centers and related assets necessary to restore the competition eliminated by the acquisition.

“Competition among health care providers can help contain costs and improve quality of care,” said Bureau of Competition Director Richard Feinstein. “The elimination of competition between Carilion and CAI and CSE will result in higher health care costs at a time when such costs already cause serious financial hardship for consumers in the Roanoke area and throughout the country.”

According to the complaint, Carilion’s $20 million acquisition of CAI and CSE reduced the number of outpatient imaging and surgical services providers in the Roanoke area from three to two, and eliminated important competition that benefitted patients, employers, and health plans. Carilion now faces competition for outpatient imaging and surgical services from only one other provider, HCA, the other major hospital system in the Roanoke area.

Carilion’s acquisition of lower-cost providers CAI and CSE will result in higher health care costs for these services, with out-of-pocket costs for many patients likely increasing nearly 900 percent for some treatments. Also, higher prices for outpatient imaging and surgical services will lead to higher premiums and the risk of reduced coverage for needed services.

The Commission vote to issue the administrative complaint was 4-0. The complaint can be found on the FTC’s Web site and as a link to this press release at http://www.ftc.gov/os/adjpro/d9338/index.shtm.

Issuing a complaint is the first step in the administrative trial process. Earlier this year, the Commission amended its Rules of Practice to streamline and improve the agency’s Part 3 adjudicative process and expedite trial. Pursuant to the amended Rules of Practice, the evidentiary hearing in this case is scheduled to occur on March 23, 2010, and the Commission will issue its final decision within approximately 100 days of the Administrative Law Judge’s initial decision.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that a defendant has violated the law.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 081-0259)
(Carilion Clinic.final.wpd)