FTC reportedly probing compliance of Albany hospital with 2015 deal

The Albany Herald, citing letters it obtained, reported Thursday that the Federal Trade Commission has launched an investigation into whether the local hospital authority and Phoebe Putney Health System have complied with a settlement agreement with the federal agency.

The FTC probe concerns opposition to the proposed new hospital in nearby Lee County, which was approved by state regulators last month, the Herald reported.

The Certificate of Need (CON) approval for Lee County’s bid to build a 60-bed, $123 million hospital is viewed as a triumph for the southwest Georgia county and a significant setback to Phoebe Putney Health System, based in nearby Albany. Georgia’s CON system regulates the building and operation of health care facilities and their services.

The overall issue goes back to 2011, when Phoebe Putney Health System acquired Palmyra Medical Center, its sole hospital competitor in the Albany market, for $195 million. The FTC challenged the deal for antitrust reasons.

The settlement in 2015 allowed Phoebe Putney Health System to keep the former Palmyra, but prohibited Phoebe Putney from opposing a CON application for any other general acute-care hospital in the Albany area for up to five years.

From the Herald story:

Lee County

Much of the correspondence takes place between Eric Rohlck, attorney for the FTC Bureau of Competition, and Frank Lowrey, an attorney who represented the Hospital Authority before the FTC. Lowrey is with the Bondurant, Mixson and Elmore firm in Atlanta. A letter from Aug. 30 said the FTC is looking into whether the Hospital Authority violated the portion of the settlement prohibiting opposition to another potential CON.

The letter clarifies that the investigation was not meant to be a determination that a violation had occurred, but that the agency was seeking evidence to establish what activities in opposition to the proposed hospital had taken place.

“Pending completion of this inquiry, please cease all document destruction activities with respect to matters that may be of relevance to this matter,” the letter states. “This includes computer files, electronic correspondence, and all other written, recorded and graphic material of every kind, including but not limited to texts.”

A few weeks later, on Sept. 26, Rohlck sent another letter to Lowrey stating that the FTC is conducting a “non-public investigation” to determine if the Hospital Authority violated the settlement. The letter sought all documents related to the Lee County hospital and its CON application “created for, sent to, presented to, or received from” several listed entities and individuals.

The second letter also requested any other information that might be pertinent to the investigation, promised confidential treatment to submitted documents and information, and reiterated that document destruction activities should cease for matters relevant to the investigation.

The Herald article continues:

“Neither this letter nor the existence of this non-public investigation should be construed as indicating that a violation of the Order has occurred or is occurring,” the Sept. 26 letter from Rohlck said. “The purpose of this request is to help Commission staff determine whether further investigation of the above-described matter is necessary. This request is also not a subpoena. Rather, it requests your cooperation on a voluntary basis in lieu of compulsory process.”

Phoebe Putney

Also among those listed in the Sept. 26 letter were the Georgia Attorney General’s Office, Georgia Alliance of Community Hospitals and state Sen. Freddie Powell-Sims, D-Dawson. Sims declined to comment on the letters, and requests for comment sent to the Attorney General’s Office and Georgia Alliance of Community Health President/CEO Monty Veazey did not receive a response.

In an email on Sept. 18, FTC spokeswoman Betsy Lordan told The Herald that the agency does not confirm the existence of investigations or provide comment on them. When contacted by The Herald again earlier this week concerning the letter correspondence, she again declined to comment.

“I appreciate the opportunity to comment, but I am declining to do so,” she said.

The Herald added: When allegations surfaced that Phoebe had violated the settlement order, health system officials stated that those claims were false. That is the position Phoebe maintains.

“Phoebe has not violated our voluntary consent agreement with the Federal Trade Commission,” a statement sent to The Herald from Phoebe officials said. “Some people associated with the proposed hospital in Lee County made allegations to the contrary, and the FTC dutifully exercised its responsibilities by looking into those allegations. Phoebe cooperated fully with the FTC and provided them with all information requested.”