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FTC Strikes Back: Novant Abandons Deal After Appeals Court Grants Injunction

Analysis  |  By Jay Asser  
   June 19, 2024

The antitrust agency will get the last laugh as it succeeds in thwarting another merger.

In a reversal of fortune, the Federal Trade Commission (FTC) will land the decisive blow in the battle over Novant Health’s acquisition of two Community Health Systems hospitals.

Following a decision by the U.S. Court of Appeals for the Fourth Circuit this week to grant an injunction pending appeal, Novant is ending its pursuit to complete the $320 million deal for Lake Norman Regional Medical Center and Davis Regional Medical Center.

The victory for the FTC comes after its efforts to block the transaction were put on the ropes by U.S. district judge Kenneth Bell, who last week denied two motions for inunction by the agency, taking issue with the FTC’s claim that the resulting market consolidation would be harmful.

While Novant could choose to pursue an appeal, it may take more than two years for the case to play out in court, creating uncertainty for the health system and its finances.

In a statement released by Novant, the operator criticized the FTC for the deal falling apart.

"Novant Health has worked tirelessly for more than a year to create a path forward for Lake Norman Regional Medical Center and Davis Regional Medical Center,” the statement said. “Despite our vision to restore services the area has lost and deliver high quality, remarkable care, we have been met with opposition from the Federal Trade Commission at every step.

“We are steadfast in our belief that these facilities and their patients would have greatly benefited from joining Novant Health, but with the FTC’s continued roadblocks we do not see a way to finalize this transaction. The communities served by these facilities deserve better than the fate they’ve been dealt by the FTC so we will look for other ways to support patients and clinicians in these communities."

Split decision

The three-judge panel of the Fourth Circuit was divided in its decision, which passed on a 2-1 vote.

Judge J. Harvie Wilkinson was the dissenting vote, arguing that the FTC was “acting too aggressively” to halt the deal.

“If the proposed transaction were a merger between two behemoths, I would feel differently," Wilkinson wrote.

The judge also echoed the concerns of Bell, who had written in his ruling that he feared Davis Medical Regional Center would close if not placed under new ownership.

Wilkinson wrote: “The Davis hospital seems on its last legs, and I worry that, as the district court found, its closure may be imminent.”

After saying it was eager to welcome the two acquired hospitals into its network, Novant will now head back to the drawing board. The 19-hospital system reported net income of $231.8 million for the first quarter and $460.8 million for fiscal year 2023.

The FTC, meanwhile, avoids taking a rare loss as the agency continues to ratchet up its oversight of hospital transactions.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit granted the FTC an injunction to stop the Novant Health-Community Health Systems deal for two hospitals.

The ruling reversed a decision by a district court judge and is causing Novant to give up on the acquisition rather than appeal in what could be a lengthy legal process.

One of the judges on the Fourt Circuit panel, J. Harvie Wilkinson, dissented in the 2-1 vote, arguing that the FTC’s overly aggressive attempt may potentially lead to one of the acquired hospitals closing.

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