FTC steps up Albany merger fight

The Federal Trade Commission is pushing forward in its fight against the merger of Phoebe Putney Memorial Hospital and another Albany facility.

The federal agency last week lifted a stay on the case and has directed an administrative law judge to set a new hearing date on the antitrust issues “as soon as is practicable,’’ but no later than July 15.

The U.S. Supreme Court last month gave the FTC a preliminary victory in its two-year fight against the merger.

The $195 million deal, which consolidated operations of Phoebe Putney and Palmyra Medical Center, was completed in December 2011.

The Supreme Court, in its unanimous ruling, set aside two previous court decisions that OK’d the merger and said the acquisition by the local hospital authority of Palmyra was not immune from antitrust scrutiny.

Marc Peterzell, an attorney with Arnall Golden Gregory who focuses on health care antitrust issues, said Monday that it appears from the FTC order that the agency is seeking “to take control of the case.”

The high court has remanded the case to the lower court, essentially instructing the judges to reconsider it in a new light. Experts have said the case will eventually return to the federal district court level.

But Peterzell said that as a practical matter, the FTC move appears “to have pre-empted” the district court case.

The administrative hearing will study the issue of whether the merger has an anti-competitive effect on the Albany marketplace, he said.

From the start, the FTC opposed the merger of the Albany area’s only two hospitals, saying it would drive up health costs in the area. Since the deal was completed in December 2011, Phoebe officials have said that costs have not increased.

In its order last week requesting a hearing quickly, the FTC noted that time is a factor because “this is now a consummated acquisition in which significant integration of hospital assets and operations — and likely, interim harm to competition — may have taken place.”

Phoebe Putney Health System issued a statement last week saying that it had been notified of the order lifting the stay.

“This was expected as a part of this process,’’ said the statement by Phoebe attorney Tommy Chambless. “Matters now move into a resumption of the discovery process in preparation for a hearing. We look forward to demonstrating the substantial benefits that have accrued and will accrue to the community we serve as a result of this acquisition by the [hospital] authority.’’

After the Supreme Court ruling, Phoebe said it would continue business as usual at the former Palmyra hospital, now called Phoebe North.

CEO Joel Wernick, at a news conference after the court decision, said, “We will proceed with the plans we have until someone tells us we cannot.’’

The Federal Trade Commission told Georgia Health News last month that it’s considering all options in its legal fight. (Here’s a link to that article).

Chambless, the attorney for Phoebe, told GHN, “The eggs have been scrambled’’ since the 2011 acquisition, making the merger hard to undo.

He said there two hospital campuses, but just one license, one lease — and one hospital.

Peterzell told GHN that because of the time elapsed since the merger was completed, “it becomes more difficult to separate” the two entities.

Overall, the case may help spark the FTC and Justice Department to be more active in antitrust enforcement, he added.