FTC to Appeal Phoebe / Palmyra Decision

John Commins, for HealthLeaders Media, June 29, 2011

The Georgia AG and the FTC wanted Sands to delay the acquisition until the conclusion of the FTC's administrative proceeding and any subsequent appeals.

Phoebe, the Authority, and HCA argued that the transaction is exempt from federal antitrust liability under the "state action" doctrine – which provides an exception for anticompetitive conduct if it is an act of government. In this case, the complaint alleged, the transaction was motivated and planned exclusively by Phoebe, acting in its own private interests.

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.

Phoebe's board approved a recommendation from its management that it make a formal offer to HCA for Palmyra on Oct. 7, 2010. However, instead of directly approaching HCA with its offer, Phoebe developed a plan under which the Authority would acquire Palmyra and then lease it to a non-profit corporation controlled by Phoebe.