A federal appeals court in Atlanta has ruled in favor of a hospital authority’s acquisition of an Albany hospital – a deal fiercely opposed on antitrust grounds by the Federal Trade Commission.
The FTC had argued that the proposed $195 million acquisition of Palmyra Medical Center by the Albany-Dougherty County Hospital Authority, originally announced a year ago, was anti-competitive and would raise health costs.
The federal agency, in an October hearing, had argued before a three-judge panel of the 11th U.S. Circuit Court of Appeals that while the hospital authority is technically making the acquisition, Phoebe Putney Health System will be running the acquired facility, currently owned by HCA.
Phoebe Putney Memorial Hospital and Palmyra, owned by HCA, are the only two hospitals in the South Georgia county.
The appeals court, in a Friday ruling, upheld a lower court ruling that the deal was protected under the state-action doctrine – that the hospital authority is a government entity and thus immune from antitrust law.
The appeals court actually accepted the FTC’s argument about diminished competition. “We agree with the Commission that, on the facts alleged, the joint operation of [Phoebe Putney] and Palmyra would substantially lessen competition or tend to create, if not create, a monopoly.’’
But the court said the state’s Hospital Authorities Law allows for such a situation. It said the Georgia General Assembly, in passing the law, “granted powers of impressive breadth to the hospital authorities.’’
“The Georgia legislature must have anticipated anti-competitive harm when it authorized hospital acquisitions by the authorities,’’ the court said. “It defies imagination to suppose the legislature could have believed that every geographic market in Georgia was so replete with hospitals that authorizing acquisitions by the authorities could have no serious anti-competitive consequences.’’
The FTC, in the wake of the ruling, said in a statement Friday that it is considering its options. ‘‘We remain very concerned that it will raise health care costs dramatically in Albany, Georgia,’’ the statement said.
Jackie Ryan, a spokeswoman for Phoebe Putney Health System, said Monday, “We are very pleased that the court has ruled that the purchase by the hospital authority can go through.’’
“We have never believed it would be anti-competitive,’’ said Ryan. “We don’t believe it will raise prices.’’
The deal will eliminate duplication of services and allow more efficient health care, Ryan said. With federal health reform being implemented, she said, “now more than ever, it’s important we look at consolidation of services.’’
The two parties will try to close the purchase in the next 10 days, Ryan said.