Mountain States-Wellmont merger delayed

Mountain States Health Alliance and Wellmont Health System are taking time to tweak their merger application after federal regulators and prominent health economists slammed the deal.

The Tennessee Department of Health last week approved the systems’ request to supplement their certificate of public advantage application. Last Friday was the deadline for the health department to give its decision on the COPA, which must be approved by state regulators in both Tennessee and Virginia in order for the merger to proceed. The Federal Trade Commission has asked both states to reject the COPAs.

“Our objective is to ensure the record in both states reflects our vision for the improved health of our region, and that the record strongly supports a positive outcome,” said Alan Levine, president and CEO of Mountain States.

The systems estimate the merger will result in about $121 million in annual cost savings after the first five years.

The FTC says the merger would create an anti-competitive healthcare environment, leading to higher prices and lower quality of care for patients. Mountain States and Wellmont have locations in Tennessee and Virginia. Johnson City, Tenn.-based Mountain States operates 13 hospitals, and Kingsport, Tenn.-based Wellmont operates six.

The FTC said together the systems would have a “near-monopoly” of services and control 71% of inpatient services in their markets. The agency also questioned both systems’ argument that as rural providers they are struggling financially and must merge to survive.