FTC sues to block Tenet’s Memphis hospital deal

Dive Brief:

  • The Federal Trade Commission is seeking to block a proposed $350 million hospital acquisition in which Memphis, Tennessee-based Methodist Le Bonheur Healthcare agreed to buy two hospitals from Tenet Health: St. Francis Hospital–Memphis and St. Francis Hospital–Bartlett.
  • The FTC alleges the deal will raise healthcare prices, reduce care quality and diminish the incentive to expand services and invest in technology.
  • If the acquisition were completed, the Memphis area would be left with three hospital systems instead of four and the combined group would control 60% of the hospital market, the FTC said in a statement on Friday.

Dive Insight:

The proposed buy drew criticism in the Memphis area soon after it was announced in December, as those in the industry worried about the consolidation’s effects.

That deal is now in question as the FTC is seeking to stop the tie-up, alleging it would harm consumers in the form of higher prices, including increased insurance premiums.

“It’s clear that patients in the Memphis area have benefited from the competitive pressure that Saint Francis brings to bear on Methodist,” deputy director of the FTC’s Bureau of Competition, Daniel Francis, said in a statement. “This transaction would take that competition away, and patients will pay the price.”

The healthcare industry has witnessed a fast clip of consolidation in recent years. The hospital lobby has argued it allows for more efficient care delivery, but health policy experts have pushed back on those findings.

Tenet said last year that it was largely leaving the Memphis market with the consummation of the deal.

As part of the sale, Methodist was set to pick up the physician practices associated with both Tenet hospitals, six MedPost urgent care centers and all but one surgery center.

While Tenet has shed hospitals at a steady clip as part of its strategic plan, it has expanded its outpatient portfolio. A key pickup in that long-term strategy was its stake in United Surgical Partners, a string of outpatient surgery centers across the country.