What happens next in the Albany hospital merger saga?
The Federal Trade Commission told Georgia Health News this week that it’s considering all options after the Supreme Court on Tuesday gave the agency a preliminary victory in its fight against the merger.
The $195 million deal, which consolidated operations of Phoebe Putney Memorial Hospital and Palmyra Medical Center, was completed in December 2011.
The Supreme Court, in its unanimous ruling, sided with the FTC, saying the purchase by the local hospital authority of Palmyra was not immune from antitrust scrutiny.
The FTC had opposed the merger of the only two Albany-area hospitals, saying it would drive up health costs in the area.
The high court remanded the case to the lower court, essentially instructing the judges to reconsider it in a new light. Experts say the case will eventually return to the federal district court level.
Jeff Perry, assistant director in the FTC’s Bureau of Competition, said this week that a hearing will also be held before an administrative law judge in Washington on the antitrust issues.
Is the merger dead? Phoebe Putney Health System seems not to think so. Phoebe officials say it’s still business as usual for the combined hospital. CEO Joel Wernick, at a news conference after the decision, said, “We will proceed with the plans we have until someone tells us we cannot.’’
And HCA, which sold Palmyra, says it now has nothing to do with the hospital or the court case.
The FTC says it will seek to determine what integration has occurred since the acquisition of Palmyra by the local hospital authority.
The agency may ask the federal district court to freeze that integration when the case arrives back at the district level, Perry said.
Divestiture of Palmyra may still be possible, Perry said.
But that could be difficult to accomplish.
Tommy Chambless, an attorney for Phoebe, told GHN, “The eggs have been scrambled,’’ since the December 2011 acquisition.
He said now there two campuses, but just one license, one lease, one hospital.
Chambless said the merger has had ‘‘no effect’’ on pricing of health care services, and that access to care and quality of care have actually improved since the hospitals were united.
The FTC has challenged completed hospital acquisitions in the past, including one in Evanston, Ill.
But the difference in the Phoebe situation, Perry said, was that the Albany hospital officials chose to go ahead with the integration despite the pending FTC court challenge.
“Whatever hardship or difficulty they may point to now is a result of steps they took with those risks in mind,’’ Perry said.
The Georgia case was part of a recent batch of merger lawsuits the FTC has brought in an attempt to revive its hospital enforcement program, the Wall Street Journal reported.
Will the court’s ruling mean a roadblock to the rampant consolidation in the hospital industry?
The only mergers that will be challenged, Perry said, are those ‘‘that are not in the public interest and violate antitrust laws.’’
Perry said the FTC also supports the move toward accountable care organizations, unions of providers and/or insurers to deliver better care.These ACOs, Perry said, do not require a merger or common ownership..
Meanwhile, HCA, the former owner of Palmyra, issued a statement to a Fox News outlet in Southwest Georgia:
“HCA closed on the sale of Palmyra Park Hospital to the hospital authority that owns Phoebe Putney in December, 2011, prior to any of the proceedings in the Supreme Court, and does not currently own or operate any assets in the Albany, Ga. area.
“Thus, HCA did not participate in the briefing or argument in the Supreme Court, and is not an active participant in the continuing litigation.”