FTC pon­ders next move

Ge­or­gia deal goes through, but ap­peals pos­si­ble

Modern Healthcare - - THE WEEK IN HEALTHCARE - Paul Barr

The Fed­eral Trade Com­mis­sion failed in its at­tempt to pre­vent the sale of Palmyra Med­i­cal Cen­ter, a deal that gives ef­fec­tive con­trol to the op­er­a­tor of its crosstown ri­val in Al­bany, Ga., Phoebe Put­ney Me­mo­rial Hos­pi­tal. But the bat­tle may not be over.

The FTC op­posed as anti-com­pet­i­tive the now-closed $198 mil­lion sale of the hos­pi­tal by HCA to the Hos­pi­tal Au­thor­ity of Al­bany-dougherty County. The hos­pi­tal au­thor­ity also owns 439-bed Phoebe Put­ney Me­mo­rial and leases it to not-for-profit Phoebe Put­ney Health Sys­tem, as it plans to do with 102-bed Palmyra.

The pur­chase closed Dec. 15 af­ter a fed­eral ap­peals court in Ge­or­gia on Dec. 9 af­firmed a lower court rul­ing that said the deal should be al­lowed to pro­ceed, cre­at­ing a more dif­fi­cult but not in­sur­mount­able path for the FTC, which would now have to try to undo the deal. The agency could con­tinue to pur­sue the ac­tion ad­min­is­tra­tively within the FTC’S in­ter­nal process, re­quest a re­hear­ing with the full 11th U.S. Cir­cuit Court of Ap­peals, which ruled on the case with a three-judge panel, or it could ap­peal to the U.S. Supreme Court.

Given the un­usual na­ture of the sit­u­a­tion, the FTC’S odds of suc­cess in con­tinu- ing to pur­sue the mat­ter are un­clear. If it were a more of a run-of-the-mill hos­pi­tal an­titrust case, it would be more likely that the FTC would ul­ti­mately fail, said at­tor­ney Toby Singer, part­ner in the Washington of­fice of Jones Day.

The case is un­usual, how­ever, be­cause of the ac­cu­sa­tion that the Hos­pi­tal Au­thor­ity of Al­bany-dougherty County and Phoebe Put­ney Health Sys­tem had schemed to avoid an­titrust con­cerns by hav­ing the hos­pi­tal au­thor­ity pur­chase the hos­pi­tal and lease it back to Phoebe Put­ney, Singer said. The au­thor­ity, as a govern­ment en­tity, has been ruled to be not bound by fed­eral an­titrust laws. The Al­bany-dougherty au­thor­ity cur­rently leases Phoebe Put­ney Me­mo­rial to Phoebe Put­ney Health Sys­tem for $1 a year, and the FTC ar­gued in its com­plaint that Phoebe Put­ney was the real buyer of the hos­pi­tal, us­ing the hos­pi­tal au­thor­ity as a con­duit to do so un­der pro­tec­tion from an­titrust laws.

The 11th Cir­cuit may be re­cep­tive to a re­quest from the FTC to have the en­tire court re­hear the case given the facts in the sit­u­a­tion, Singer said. But be­cause the 11th Cir­cuit in gen­eral has ruled in fa­vor of al­low­ing deals to pro­ceed, that his­tory works against the FTC’S chances to pur­sue a re­hear­ing, she said.

The out­look would be sim­i­larly mixed in terms of get­ting the Supreme Court to hear the case, while the chances that the FTC would

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