FTC files more comments opposing health system merger

Federal Trade Commission staff has fired another salvo in the debate over the benefits of a merger between the area's two hospital systems.The agency's staff puts the burden of proof of showing that creating a dominant regional health system will be beneficial to residents on the health care organizations — and says such a system would be too big to control.Health officials in two states are currently considering the merits of Wellmont Health System's and Mountain States Health Alliance's request for a cooperative agreement in Virginia and a certificate of public advantage, or COPA, in Tennessee. If approved, the health organizations would be protected from federal antitrust laws used to prevent and break up health care monopolies.But, as detailed in other released comments from FTC staff, the agency doesn't believe the merger would be in the best interest of patients, and warns it could lead to higher costs for health care, despite the systems' assurances and pledged pricing controls.In the comments released Friday to the Tennessee Department of Health, FTC staff claims the requirements of the laws allowing the cooperative agreement and COPA are not being met to show the benefits of the merger outweighs the harm to competition and is the last resort."Further, because COPA applicants bear the burden of demonstrating that they could not achieve the benefits they claim would result from this COPA through a less restrictive alternative, it is the parties' burden to undertake a reasonable investigation and provide an explanation of the available alternatives," the comments read."Instead, the parties expect (the Tennessee Department of Health) to accept at face value their unsubstantiated claims about the dangers of "out-of-market" mergers and the infeasibility of alternative collaborations."In October, after the FTC staff made a comment in Virginia claiming the merger would cause serious competitive and consumer harm, joint Wellmont and Mountain States statements said the agency's concerns were "speculative and unsupported."In the latest filing, the FTC questioned the systems' tactic of characterizing its comments as unfounded."It is telling that the parties seem more focused on encouraging TDH to ignore the comments from FTC staff and others that cast doubt on their claims than addressing the issues that the comments raise," the agency's staff wrote. "The proposed merger would create a behemoth hospital system in Northeast Tennessee and Southwest Virginia that would have tremendous market power at its disposal. Furthermore, the New Health System would have opportunities and strong financial incentives to evade the proffered regulatory commitments."Following the FTC's comments, the two health systems released a joint statement Friday afternoon vowing to press on with the merger. After review, a full response to the comments will be filed with the Tennessee Department of Health, they said."The FTC staff have made clear their opposition to state statutes in Tennessee and Virginia that permit mergers such as the one we have proposed, despite the validation of those statutes by the U.S. Supreme Court," the systems' statement said. "We remain confident that our states are fully capable and uniquely qualified to determine whether our application meets the standards outlined in state policy and also to actively supervise the merged system to ensure the region benefits."We remain confident we are taking the right approach to addressing pressing health needs, protecting access and enhancing the quality of care in our region. Our comprehensive proposal specifies enforceable plans to improve community health, limit health care cost growth, enhance health care services, improve health care value, retain local governance, expand health research and graduate medical education and attract and retain a strong workforce. Stakeholders in our community have overwhelmingly spoken out in support of our proposal, and we remain committed to pursuing these goals for the benefit of our region."The Southwest Virginia Health Authority unanimously approved the proposed merger on Nov. 7 and the Virginia Department of Health commissioner is weighing that recommendation for that state's decision. In Tennessee, the Department of Health is slated to make a decision on the COPA by Jan. 12.