FTC drops its challenge of W. Virginia hospital merger

The Federal Trade Commission is dropping its challenge of a West Virginia hospital merger in light of the passage of a state law meant to protect the deal from federal antitrust scrutiny.

The FTC filed a complaint last year alleging a deal by Cabell Huntington (W.Va.) Hospital to acquire nearby rival St. Mary’s Medical Center would create a near monopoly on services that could lead to higher prices and lower quality.

In March, however, West Virginia Gov. Earl Ray Tomblin signed a bill shielding hospital mergers from state and federal antitrust scrutiny, assuming they get certain other state approvals.

Last week, the FTC voted unanimously to abandon the challenge. The FTC said in a statement that it remains concerned about the merger but is walking away from the fight because of the new state law.

“This case presents another example of healthcare providers attempting to use state legislation to shield potentially anticompetitive combinations from antitrust enforcement,” according to the FTC statement. The agency said it believes that laws such as the one in West Virginia “are likely to harm communities through higher healthcare prices and lower healthcare quality.”

The FTC also emphasized, however, that just because the West Virginia law led the commission to dismiss its complaint in this case doesn’t mean that it will do the same in similar situations in the future.

St. Mary’s Medical Center CEO Michael Sellards praised the FTC’s decision in a statement, saying the acquisition will benefit the tristate region. He said St. Mary’s will now seek Vatican approval so the deal may move forward.

Cabell Huntington Hospital CEO Kevin Fowler and Monte Ward, chief financial and acquisition officer, said in a statement that the merger will improve the quality of healthcare and allow the hospitals to expand services for patients in their region in a cost-efficient manner.