Health Care Alert: Some Practical Lessons from the ProMedica Hospital Merger Decision

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On March 29, a federal district court in Ohio granted the FTC preliminary relief to prevent ProMedica Health System in Toledo, which had acquired nearby St. Luke’s Hospital, from further integrating St. Luke’s into the ProMedica system. The basic concern was that the merger would provide ProMedica with market power sufficient to raise the prices that both St. Luke’s and the other ProMedica facilities could obtain from commercial health plans.

In May 2010, ProMedica and St. Luke’s executed a “joinder agreement” by which ProMedica would become the sole member of St. Luke’s. The FTC opened an investigation in July. In August, the FTC and the parties agreed to a hold-separate order limiting ProMedica’s ability to control St. Luke’s, and the transaction closed in September. The investigation continued, but when ProMedica refused to extend the hold-separate order in early 2011, the FTC filed motion for preliminary injunction to extend it until the case could be tried before an FTC administrative law judge. After conducting a two-day hearing, the court issued the injunction, accompanied by a 115-page opinion with a preliminary antitrust analysis of the transaction.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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