The health systems decided not to fight regulators in court.
Chalk up another victory for the Federal Trade Commission and another defeat for hospital dealmaking.
A court ruling wasn’t even necessary this time around as John Muir Health and Tenet Healthcare called off their agreement for the former to acquire San Ramon Regional Medical Center due to the FTC’s motion to block the deal.
The health systems said in a statement that they chose to not challenge the agency in court because of the length of time and costs a legal battle would require. While the FTC may have been able to persuade a court that the deal would have eliminated competition and led to higher prices, the agency’s ability to kill a deal without a legal decision by applying pressure alone is discouraging for hospital M&A.
The agreement would have given John Muir, which already held a 49% stake in San Ramon Regional since 2013, the remaining 51% from Tenet for $142.5 million.
After the health systems called off the deal, the FTC moved to dismiss their case challenging the transaction.
“The FTC has scored another major health care win in less than a month, delivering patients in California continued access to quality, affordable health care services. John Muir’s anticompetitive hospital takeover would have driven up health care costs for critical services like heart surgery, spinal surgery, and maternity care,” Bureau of Competition director Henry Liu said in a statement. “It also threatened to eliminate improvements in care driven by competition, which directly benefit patients.
“Now that this transaction is terminated, John Muir and Tenet’s San Ramon Regional Medical Center can continue competing head-to-head to offer high-quality care at the best prices for Californians in the I-680 corridor.”
The FTC and the Justice Department also jointly issued the 2023 merger guidelines, which describe what the agencies consider when reviewing mergers and acquisitions.
The new guidelines modify the draft merger guidelines that were released in July and “emphasize the dynamic and complex nature of competition ranging from price competition to competition for the terms and conditions of employment, to platform competition.”
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
John Muir and Tenet have abandoned their agreement over San Ramon Regional Medical Center because of the FTC’s lawsuit challenging the deal.
Following the health systems’ decision, the FTC announced it will drop its case while calling the result a significant win against anticompetitive practices.