FTC, GA Challenge 'Anticompetitive' Phoebe/Palmyra Acquisition

John Commins, April 21, 2011

The Federal Trade Commission and the Georgia Attorney General's Office jointly announced Wednesday that they are challenging as anticompetitive Phoebe Putney Health System, Inc.'s proposed $195 million acquisition of rival Palmyra Park Hospital, in Albany, GA from HCA.

In a complaint filed this week in U.S. District Court in Albany, the FTC and the Georgia AG also allege that Phoebe Putney constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law."

The Georgia AG and the FTC want a federal judge to delay the acquisition until the conclusion of the FTC's administrative proceeding and any subsequent appeals, the FTC and the Georgia Attorney General's Office said in a joint statement.

"We have challenged this transaction for one very simple reason," said Richard Feinstein, Director of the FTC's Bureau of Competition, in a media release. "By eliminating vigorous competition between Phoebe and Palmyra, this merger to monopoly will cause consumers and employers in the Albany region to pay dramatically higher rates for vital healthcare services, and will likely reduce the quality and choice of services available in the community as well."

Besides Phoebe and Palmyra, there is one other independently owned hospital within the six-county area around Albany. The merger would give Phoebe more than 85% of the market. By eliminating the direct and substantial competition between Phoebe and Palmyra, the transaction would give Phoebe the ability and incentive to increase reimbursement rates charged to commercial health plans and their members, leading to higher healthcare costs, the complaint said.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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