FTC Requires Universal Health Services to Sell 15 Psychiatric Facilities as a Condition of Acquiring Rival Psychiatric Solutions

The Federal Trade Commission will require Universal Health Services, Inc., one of the nation’s largest hospital management companies, to sell 15 psychiatric facilities as a condition of its $3.1 billion acquisition of Psychiatric Solutions, Inc. The proposed settlement is the latest example of the FTC’s ongoing efforts to promote competition in health care markets.

According to the FTC, the acquisition as originally proposed would have reduced competition in the provision of acute inpatient psychiatric services in three local markets: Delaware, Puerto Rico, and metropolitan Las Vegas, Nevada.

Acute inpatient psychiatric services are intensive hospital services provided to patients who pose a danger to themselves or others, or are unable to perform basic life functions, due to an acute psychiatric episode. Facilities owned by Universal Health and Psychiatric Solutions are the leading providers of these critical services in each of the three divestiture markets. The acquisition of Psychiatric Solutions would have significantly increased Universal Health’s market power in these areas, increasing its ability to impose price increases and reducing its incentives to improve services.

The FTC complaint charged that the acquisition as originally proposed would have violated federal antitrust laws by combining the two largest competitors in each of the three markets. The proposed settlement preserves competition in the relevant areas by requiring the sale of 15 facilities, including two inpatient hospitals in Las Vegas; one inpatient hospital in Delaware; and one inpatient hospital and eleven affiliated outpatient clinics in Puerto Rico. The clinics and other facilities must be sold to FTC-approved buyers.

The Commission vote approving the complaint and proposed consent order was 5-0. The order will be published in the Federal Register subject to public comment for 30 days, until December 15, 2010, after which the Commission will decide whether to make it final. Comments can be submitted electronically at the following link: https://ftcpublic.commentworks.com/ftc/psychiatricsolutions.

The FTC would like to thank the offices of the attorneys general in Delaware and Nevada and the Department of Justice of Puerto Rico for their assistance in this matter.

NOTE: The Commission issues 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 issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent order is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

Copies of the complaint, consent order, and an analysis to aid public comment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. 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. 101-0142)