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FTC Cracks Down on M&A, Blocks John Muir Health's Deal With Tenet

Analysis  |  By Jay Asser  
   November 27, 2023

The move comes after the agency indicated it may intervene in more acquisitions going forward.

In its latest enforcement of antitrust and competition policies, the Federal Trade Commission (FTC) has sued to halt John Muir Health's agreement to acquire San Ramon Regional Medical Center from Tenet Healthcare.

The agency's motion to block the deal, along with recent changes it made to its policy statements and merger guidelines, signal that M&A activity could be more scrutinized heading into 2024, potentially impacting the plans of health systems.

In the case of John Muir's deal, the FTC and the California attorney general's office jointly filed an administrative complaint in federal district court, with the FTC also seeking a temporary restraining order and preliminary injunction.

John Muir entered into the agreement with Tenet in January to acquire the latter's 51% stake in San Ramon Regional for $142.5 million, adding to its already-held 49% interest since 2013.

The FTC argued that with the deal, John Muir would control three hospitals in California's I-680 corridor that provide inpatient general acute care, allowing them to control more than 50% of the market. The lack of competition could lead to lower quality of care and higher prices.

"San Ramon Regional Medical Center has played an important role in ensuring Californians in the I-680 corridor have access to quality, affordable care for critical health care services, such as cardiac surgery and childbirth," Henry Liu, director of the FTC's Bureau of Competition, said in a statement. "John Muir's acquisition of San Ramon Medical would increase already high health care costs in the area and threaten to stall quality improvements that help advance care for all patients."

In response, John Muir stated it was disappointed by the FTC's decision and is assessing next steps, including challenging the decision in court.

"We believe the proposed acquisition would benefit our community, caregivers and patients, as well as John Muir Health, San Ramon Regional Medical Center, and Pleasanton Diagnostic Imaging," Mike Thomas, president and CEO of John Muir Health, said in a statement.

Increased scrutiny is here

The FTC had already been laying the groundwork for more challenges for M&A deals.

In the summer, the agency proposed changes to the premerger notification form and instructions, as well as the premerger notification rules implementing the Hart-Scott-Rodino Act. The FTC said the changes would enable it to "more effectively and efficiently screen transactions for potential competition issues with the initial waiting period, which is typically 30 days."

Then, the FTC announced the withdrawal of two policy statements related to healthcare market antitrust enforcement, which provided guidelines for consolidation. The FTC said the statements are "outdated and no longer reflect market realities."

It's clear the FTC is tightening its restrictions on mergers and putting deals under the microscope. How that will affect M&A activity is yet to be seen, but according to a recent HealthLeaders Mergers, Acquisitions, and Partnerships survey, 47% of healthcare executives said that state and federal regulations are affecting their M&A plans.

When asked if the regulatory climate is having the type of influence, Randy Davis, vice president and CIO at CGH Medical Center, told HealthLeaders: "From the perspective of a successful M&A plan, I would wholeheartedly agree with that. But from the perspective of, 'Is it driving M&A?' No, not at all. The regulatory climate does not, in and of itself, push M&A because those regulations are a given."

Where hospital transactions may have protection from increased FTC scrutiny is in states with certificate of public advantage (COPA) laws. For example, LCMC Health's recently secured a major win over regulatory requirements when a U.S. district judge ruled in favor of its purchase of three Tulane University hospitals from HCA Healthcare.

The ruling backed the power of state COPAs, which allow deals to avoid federal approval if they receive oversight from the state, which was present in LCMC's deal from the Louisiana Department of Justice. However, only 19 states currently have some version of COPA law.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


John Muir Health's agreement to acquire the controlling stake in San Ramon Regional Medical Center from Tenet Healthcare was blocked by the FTC for eliminating competition in the area.

The FTC said that the deal would allow John Muir to control three hospitals in California's I-680 corridor that provide inpatient general acute care, giving them more than half of the market.

The agency's decision is the latest sign that it wants to be more restrictive of hospital transactions, which could affect M&A activity in the coming year.

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