Dive Brief:
- A judge for the U.S. District Court of the Eastern District of Louisiana on Wednesday ruled in favor of LCMC Health and Louisiana's attorneys in a dispute with the Federal Trade Commission that tested the relative power of federal hospital merger regulations and state-issued exemptions.
- The lawsuit centered on certificates of public advantage (COPAs), a tool used by states to shield healthcare mergers from federal antitrust scrutiny in exchange for prolonged state oversight. The FTC has discouraged states from issuing COPAs for hospital mergers.
- The ruling will allow the New Orleans-based nonprofit to move forward with its purchase of three Tulane University hospitals from HCA Healthcare for $150 million without federal review.
Dive Insight:
Wednesday’s ruling marks the latest battle between state and federal lawmakers regarding how to oversee hospital mergers that continue to grow in size.
Federal regulators and lawmakers have called for more oversight into the hospital merger process, arguing that consolidation drives up healthcare prices and can reduce access to care.
In a 2022 report, the FTC argued that any benefits from COPAs were temporary, and affected areas are ultimately “left with a hospital monopoly that can exercise its market power without constraint.”
The LCMC deal to acquire Tulane University Medical Center, Tulane Lakeside Hospital and Lakeview Regional Medical Center from HCA Healthcare, which was first announced in October of last year, was made possible by a COPA.
The FTC challenged the COPA, believing that LCMC was still required to submit to a federal review. The agency asked the court to halt the acquisition and have the health system submit to the review process.
LCMC on April 19 filed a lawsuit against the FTC, arguing that the agency’s request to halt the acquisition wasn’t valid because the health system had already gained state approval for the acquisition.
In the ruling on Wednesday, the court sided with LCMC, finding the system wasn’t subject to federal pre-merger review processes. In the opinion, Judge Lance Africk found that such a review process would be counterproductive to the very purpose of the COPA.
“As the State points out, the allegations of the FTC’s petition indicate that the purpose of this lawsuit is to subject the Hospitals’ transaction to the precise ‘antitrust scrutiny’ that the Attorney General intended to avoid by issuing the COPA,” Africk wrote.
In a statement, LCMC CEO Greg Feirn applauded the ruling, saying, “This partnership underwent a thorough review and approval from the Louisiana Department of Justice, which has been validated by the court’s decision.”
Some states continue to make mergers attractive for hospital systems, even without COPAs. North Carolina has proposed a bill that would exempt the University of North Carolina’s health system from antitrust scrutiny. Mississippi passed similar legislation earlier this year.
