Lifespan and Care New England Abandon Merger in Face of FTC/Rhode Island AG Challenge

FTC DOJ Win

Lifespan and Care New England, Rhode Island's two largest nonprofit hospital systems, abandoned their proposed merger on February 23, 2022 in face of joint state and federal regulatory challenge. The Rhode Island AG denied the merger application on February 17, 2022 and joined the FTC in a lawsuit for preliminary injunction in federal court to block the merger. Less than a week later, the entities withdrew their application and abandoned the proposed merger in a win for the antitrust agencies.

New Jersey District Court Grants Preliminary Injunction to Block Hackensack Meridian Acquisition of Englewood Healthcare

FTC DOJ Win

The New Jersey district court granted the preliminary injunction to block the proposed merger of Hackensack Meridian and Englewood Healthcare, finding that the FTC established its prima facie case that the merger will likely lead to anticompetitive effects in the relevant product and geographic markets. The entities filed for appeal with the 3rd Circuit, pending the FTC in-house administrative trial scheduled for October 2021.

DOJ Settles Challenge of Geisinger Partial Acquisition of Evangelical

FTC DOJ Action

Geisinger and Evangelical reached a settlement agreement with DOJ in March 2021 after the DOJ filed suit in the district court of Pennsylvania, challenging agreements that include Geisinger Health System’s bid to acquire 30% ownership of Evangelical Community Hospital (ostensibly to avoid antitrust scrutiny) and other potentially anticompetitive conduct involving “significant entanglements” between the two parties. In the settlement, Geisinger agreed to reduce and limit any future ownership interest of Evangelical to a cap of 7.5%. Additionally, Geisinger is restricted from making any loan or line of credit associated with Evangelical, and from being involved in any decision-making in management or leadership positions at Evangelical. The parties also agreed to implement an antitrust compliance program.

Methodist Le Bonheur and Tenet Abandons Challenged Merger

FTC DOJ Win

In November 2020, the FTC jointly filed suit with the Tennessee AG for a preliminary injunction to block Methodist Le Bonheur's proposed acquisition of two hospitals owned by Tenet Healthcare. The complaint alleged the $350 million merger would substantially lessen competition and give Methodist control of close to 60% of the inpatient general acute care services in the Memphis area, potentially resulting in higher premiums and out-of-pocket costs for patients. A month later, the parties announced that they had abandoned the merger.

FTC Concedes in Failed Challenge of Jefferson-Albert Einstein Merger

FTC DOJ Loss

In its first major loss in a healthcare merger challenge in recent years, the FTC officially dropped its case against the proposed merger of Jefferson Health and Albert Einstein Healthcare Network in Philadelphia. The Pennsylvania attorney general had withdrawn from the challenge more than a month before the FTC announcement to do the same. The joint federal and state enforcement effort suffered a defeat in federal court, when the Eastern District of Pennsylvania denied a preliminary injunction against the merger (see coverage on the Source Blog). Subsequently, the 3rd Circuit Court of Appeals denied the emergency motion for an injunction pending outcome of the appeals process, essentially allowing the merger to proceed.

Texas Grants COPAs to Transactions Over FTC Objection

FTC DOJ Loss

In September 2020, FTC issued a strong warning to the Texas Health and Human Services Commission (HHSC) regarding two transactions involving purchases from the for-profit Community Health Systems (CHS). The first transaction involves Hendrick Health System's purchase of Abilene Regional Medical Center and Brownwood Regional Medical Center, and the second transaction is Shannon Health System's purchase of San Angelo Community Medical Center. Because a Certificate of Public Advantage (COPA) law passed in 2019 shields healthcare transactions in Texas from federal antitrust oversight, the FTC has no enforcement authority. Instead, the federal agency sent a 70-page comment letter to the Texas HHSC and AG, urging the state to deny the proposed transactions as they would create a monopoly in the markets and result in higher prices to consumers. Despite the strong opposition, the HHSC, in consultation with the Texas AG, approved both deals in October 2020, as it determined the benefits of the proposed deals outweighed any disadvantages.

Centene-WellCare Merger Approved by States and DOJ with Divestitures

FTC DOJ Action

After receiving regulatory approval from the U.S. Department of Justice and 26 state insurance agencies, the $15 billion deal was completed on January 23, 2020. Seven states imposed conditions on the deal with divestitures in four states. The divestitures included Centene's Illinois Medicaid and Medicare Advantage plans, WellCare's Missouri Medicaid and Medicare Advantage plans and WellCare's Nebraska Medicaid plan.

U.S. District Court for the District of Columbia Approves CVS-Aetna Merger

FTC DOJ Action

In November 2018, CVS-Aetna received all regulatory approval to merge, contingent upon Aetna’s divestiture of its Medicare Part D business and other conditions imposed by individual states. However, Judge Richard Leon of the U.S. District Court for the District of Columbia halted the merger, refusing to give his rubber stamp of approval as part of the routine judicial review process. An evidentiary hearing took place in June 2019. Ultimately, the court was not persuaded by opponents to the acquisition and permitted the agreement to go through on September 4, 2019

Eighth Circuit Blocks Merger of Sanford Health and Mid Dakota Clinic

FTC DOJ Win

The Eighth Circuit affirmed the U.S. District for the District of North Dakota decision to grant the FTC and the State of North Dakota a preliminary injunction to block the merger of Sanford Health (Sioux Falls, SD) and Mid Dakota (Bismarck, ND). The federal judge held on December 13, 2017 that the merger of the two hospital systems would reduce competition for healthcare services in the region, resulting in higher prices and lower quality of services. The hospitals abandoned the merger in July 2019. The Eighth Circuit affirmed the U.S. District for the District of North Dakota decision to grant the FTC and the State of North Dakota a preliminary injunction to block the merger of Sanford Health (Sioux Falls, SD) and Mid Dakota (Bismarck, ND). The federal judge held on December 13, 2017 that the merger of the two hospital systems would reduce competition for healthcare services in the region, resulting in higher prices and lower quality of services. The hospitals abandoned the merger in July 2019.

FTC and Colorado AG Impose Conditions on UnitedHealth Group and DaVita Medical Group Merger

FTC DOJ Action

UnitedHealth Group and DaVita Medical Group received the greenlight from the FTC and state regulators, notably with conditions imposed in Nevada and Colorado, respectively. UnitedHealth Group operates UnitedHealthcare, which is the nation’s largest health insurer, as well as Optum, its medical practice division that operates in ten states. Its integration with DaVita, a physician practice group, raises both horizontal and vertical integration concerns. In the Nevada market, the companies reached a settlement with the FTC that would require UnitedHealth Group to divest DaVita’s HealthCare Partners of Nevada. Colorado Attorney General Phil Weiser also imposed restrictions in a consent judgment.

FTC and Massachusetts AG Impose Conditions on Beth Israel and Lahey Health Merger

FTC DOJ Action

Massachusetts Attorney General gave her approval of the proposal to create the second-largest healthcare system in the state but imposed conditions on the mega merger. The most notable restriction, in addition to over $70 million in community investments for low-income populations, is a seven-year price cap to ensure the merged entity’s price increases remain below the state’s annual healthcare cost growth benchmark of 3.1%. This unprecedented condition most likely derived from reports by the Massachusetts Health Policy Commission (HPC), which projected a $1 billion potential cost increase from the merger. The HPC warned that the merged entity would gain greater market power and leverage in negotiating with insurers, allowing it to inflate prices. The price safeguards imposed to mitigate these effects also seemed to satisfy the FTC, which issued a statement on the same day to close its investigation of the transaction.

DOJ approves Cigna-Express Scripts Merger without Conditions

FTC DOJ Action

Health insurer Cigna’s acquisition of pharmacy benefit manager (PBM) Express Scripts received approval from DOJ, following a six-month investigation by the antitrust division of the Justice Department. In reviewing the transaction, the DOJ concluded the Cigna-Express Scripts merger is unlikely to result in harm to competition or consumers because “Cigna’s PBM business nationwide is small” and “at least two other large PBM companies and several smaller PBM companies will remain in the market post-merger.” Read DOJ press release.

Justice Department Requires CVS and Aetna to Divest Aetna’s Medicare Individual Part D Prescription Drug Plan Business to Proceed With Merger

FTC DOJ Action

The DOJ gave its final approval to the $69 billion merger of CVS and Aetna, contingent upon Aetna’s divestiture of its Medicare Part D business. CVS’s proposed acquisition of Aetna faced strong opposition from many antitrust experts and consumer advocacy groups, and antitrust regulators agreed that the merger could cause "anticompetitive effects, including increased prices, inferior customer service, and decreased innovation,"because CVS and Aetna are major competitors in the sale of Medicare Part D prescription drug plans to individuals. To alleviate Part D consolidation concerns, Aetna reached an agreement in late September to sell its Part D business to WellCare, paving the way for the final approval of the proposed merger. Read more on The Source Blog.

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