New hur­dle for Palmyra

Modern Healthcare - - The Week In Healthcare - Joe Carl­son

In a na­tion­ally watched an­titrust dis­pute, the planned pur­chase of a 120-bed hos­pi­tal in South­west Ge­or­gia for $195 mil­lion has been placed on hold again, this time by the 11th Cir­cuit Court of Ap­peals. The court on July 6 agreed to grant emer­gency mo­tions for a pre­lim­i­nary in­junc­tion and ex­pe­dited re­view re­gard­ing the sale of Palmyra Med­i­cal Cen­ter, the sole acute-care com­peti­tor to Phoebe Put­ney Health Sys­tem in a seven-county area around Al­bany, Ga.

The Fed­eral Trade Com­mis­sion asked the ap­peals judges to stop the sale un­til the out­come of the ap­peal only af­ter a district court judge on June 26 lifted an ear­lier tem­po­rary re­strain­ing or­der placed on the sale. Ex­perts say that loss came at a crit­i­cal time for the FTC, which is re­spond­ing to the stepped-up pace of health­care merger ac­tiv­ity with a height­ened level of scrutiny.

The Phoebe-Palmyra case fea­tures a some­what un­usual but in­creas­ingly com­mon type of de­fense known as “state ac­tion,” which es­sen­tially says that a pri­vate en­tity can legally dis­place competition with­out FTC re­view if the en­tity op­er­ates a gov­ern­ment-owned fa­cil­ity un­der proper over­sight. (July 4, p.10)

State ac­tion im­mu­nity re­quires an af­fir­ma­tive state­ment from a leg­is­la­ture that it has en­acted a pol­icy to al­low po­lit­i­cal sub­di­vi­sions to dis­place competition— some­thing the FTC has been ac­tively dis­cour­ag­ing states from do­ing. On June 8, for ex­am­ple, the FTC ad­vised lawmakers in Connecticut not to ap­prove a bill that would ex­tend state-ac­tion pro­tec­tion to cer­tain providers and man­aged-care com­pa­nies. That bill is still on hold.

In the Ge­or­gia case, state ac­tion is a de­fense be­cause the legal pur­chaser of Palmyra will be the Hos­pi­tal Au­thor­ity of Al­bany-Dougherty County. The same hos­pi­tal au­thor­ity also owns Phoebe Put­ney Me­mo­rial Hos­pi­tal and leases it to the not-for-profit cor­po­ra­tion Phoebe Put­ney Health Sys­tem for $1 a year.

“The au­thor­ity here was es­sen­tially a straw man, and what we be­lieved was go­ing on was a merger-to-mo­nop­oly or­ches­trated en­tirely by the pri­vate ac­tors with no mean­ing­ful over­sight by the state,” Rich Fe­in­stein, di­rec­tor of the FTC Bu­reau of Competition, said June 27 dur­ing a health­care law panel dis­cus­sion in Bos­ton.

Phoebe Put­ney Health Sys­tem As­sis­tant Gen­eral Coun­sel Dawn Benson said the FTC must make that ar­gu­ment be­cause it has no other way around the strong state-ac­tion case law in the 11th Cir­cuit.

Benson also said the FTC’s ad­min­is­tra­tive court chal­lenge—which runs sep­a­rately from the district court process—should be voided be­cause Sands ruled that the com­mis­sion has no ju­ris­dic­tion on the mat­ter. An FTC spokesman con­firmed that the com­mis­sion’s ad­min­is­tra­tive chal­lenge re­mains in place.

“It’s al­ways been our po­si­tion that in the ab­sence of au­thor­ity of the FTC, this sit­u­a­tion should be de­cided in the 11th Cir­cuit,” Benson said. “We be­lieve it is the best thing for the com­mu­nity and we are look­ing for­ward to it pro­ceed­ing.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.