The agency alleges the transaction could lead to higher prices and worse quality of care.
The Federal Trade Commission (FTC) is stepping in to halt another deal between health systems.
This time, the agency is taking aim at the Novant Health’s purchase of two North Carolina hospitals from Franklin, Tennessee-based Community Health Systems (CHS) for $320 million due to the deal threatening costs and quality of care, regulators said.
The acquisition, which gives Winston-Salem, North Carolina-based Novant control of Mooresville, North Carolina-based Lake Norman Regional Medical Center and Statesville, North Carolina-based Davis Regional Medical Center, was announced in February of last year.
Novant already operates Huntersville Medical Center and serves more patients that any other hospital in the Eastern Lake Norman Area, the FTC stated. Through the transaction, the agency alleges Novant would seize 65% of the market for inpatient general acute care services in the area, allowing the nonprofit system to raise its rates for services while reducing its incentive to attract patients.
“Hospital consolidations often lead to worse outcomes for nurses and doctors, result in higher prices, and can have life and death consequences for patients,” Henry Liu, director of the FTC’s Bureau of Competition, said in the news release. “There is overwhelming evidence that Novant’s deal with Community Health Systems will be detrimental to patients in the Eastern Lake Norman Area, including leading to higher out-of-pocket costs for critical health care services.”
In response to the FTC’s decision, a spokesperson for Novant said the organization will pursue legal action.
"As a nationally recognized leader in quality and patient safety, Novant Health is committed to delivering the highest-quality, patient-centered, physician-directed care to the communities served by Lake Norman and Davis Regional Medical Centers," the system said. "As we keep that commitment across North Carolina, including throughout the Greater Charlotte area, we will pursue available legal responses to the FTC's flawed position announced today. We remain confident that Novant Health can bring exceptional care, leading-edge innovation, and long-term stability to Lake Norman and Davis Regional Medical Centers."
For CHS, the deal was part of a string of sales by the system last year to alleviate its finances. Even if the FTC is successful in thwarting the transaction with Novant, CHS could still seek out buyers.
Financial pressure has been a significant motivator in health system dealmaking, with a recent report by Kaufman Hall revealing that 28% of the 65 transactions in 2023 involved a financially-distressed partner.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
Novant Health’s purchase of Lake Norman Regional Medical Center and Davis Regional Medical Center from Community Health Systems is being challenged by the FTC through a lawsuit.
The FTC argues that the deal would give Novant control over 65% of the market in the area, resulting in less incentive to compete for patients.
Novant said they will pursue a legal response to the FTC’s “flawed position” and are confident they can provide quality care at the acquired hospitals.