Regulators claim the deal presents "substantial risk" of higher healthcare costs, lower quality, and reduced access to care.
If consummated, the proposed merger of Wellmont Health System and Mountain States Health Alliance would lead to significantly less competition for healthcare services in southwest Virginia and northeast Tennessee, the Federal Trade Commission declared.
In a comment to the Tennessee Department of Health, FTC staff expressed concerns that the deal would "eliminate this beneficial competition" that now exists between the two neighboring health systems.
"It is clear that the new health system would have a dominant share of the market, making it a near-monopoly and allowing it to exercise significant market power," FTC staff said, adding that any state oversight likely would not mitigate the harm created by the merger.
In September, FTC regulators expressed similar concerns in comments submitted to the Southwest Virginia Health Authority, which is reviewing a cooperative agreement request.
Earlier this month, Alexis Gilman, assistant director for the Mergers IV Division of the FTC, spoke at a public hearing before the Tennessee Department of Health in Johnson City, TN, and recommended the Certificate of Public Advantage (COPA) be denied.
"The hospitals have not sufficiently justified why this highly anticompetitive merger is necessary and the only way to achieve their claimed benefits," Gilman said.
If the merger is approved by Virginia and Tennessee, the deal is exempt from FTC antitrust challenges.
"It's in the state's hands and all FTC can do is try to persuade them to see things the way they do and not issue the COPA," says Jay L. Levine, a disinterested observer and anti-trust litigator with PorterWright.
"If the COPA isn't issued, then the merger may be DOA unless the hospitals want to try and beat the FTC in court, which may be doubtful."