CHS’ Texas hospital sales could raise costs, lower quality: FTC

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In the Press

Thomas Greaney
Thomas GreaneyDistinguished Fellow and Advisory Board Member

Modern Healthcare

 Tara Bannow
September 15, 2020

Distinguished Fellow and Advisory Board Member Tim Greaney was quoted in the 9/15/2020 Modern Healthcare article “CHS’ Texas hospital sales could raise costs, lower quality: FTC“:

The FTC sent its analysis to the Texas Health and Human Services Commission, the agency responsible for approving the two applications under the state’s COPA law. If HHSC gives the green light, Hendrick Health System and Shannon Health System would become the only acute-care hospital operators in two Texas cities: Abilene and San Angelo.

“It’s a free pass, essentially, from federal antitrust scrutiny,” said Tim Greaney, a professor at UC Hastings Law School who has studied COPAs.

Interestingly, Texas’ COPA law allows merged entities to terminate the COPA by giving HHSC 30 days’ notice. The FTC emphasized that once the hospital assets are combined, Hendrick could opt to no longer comply with the regulation. The agency also noted the difficulty of “unscrambling the eggs” after a merger is complete and hospitals and service lines were already consolidated, staffing and physicians cut or reorganized, contracts with insurers renegotiated and IT systems integrated.

Greaney said his reading of that is that the merger itself would not be unwound—which is virtually impossible to do after the fact—just the regulatory requirements on the merged systems, which appears to be a “huge loophole.”

“That’s stunning,” he said. “Why would you want to keep the COPA in place a year from now if you can just rid yourself of the requirements?”

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