Bloomberg News

Supreme Court to Review Phoebe Putney Purchase of Palmyra

June 25, 2012

The U.S. Supreme Court said it will decide whether states can block antitrust scrutiny of hospital mergers such as Phoebe Putney Health System Inc.’s acquisition of Palmyra Park Hospital in Georgia.

The justices today said they will hear the Federal Trade Commission’s appeal of a U.S. appellate court ruling that the proposed purchase of HCA Inc.-owned Palmyra, based in Albany, Georgia, could be carried out over the agency’s objections.

The Atlanta-based 11th U.S. Circuit Court of Appeals said the Georgia state legislature granted antitrust immunity to the deal, trumping the FTC’s assertion that the acquisition would result in too few health-care options for Albany residents.

“We are pleased that the Supreme Court will consider the Phoebe Putney matter in the coming term,” FTC Chairman Jon Leibowitz said in an e-mailed statement. “This case is important to consumers, who benefit from a competitive health care marketplace. It also may provide crucial guidance on the boundaries of the state action doctrine.”

A decision by the justices to limit the scope of state exemptions would send a message to other hospitals considering acquisitions, Leibowitz said earlier this month in an interview.

“There will be a real opportunity for stopping anticompetitive behavior by some health-care providers,” he said.

Cost Increases

Under Leibowitz, the FTC has made it a priority to scrutinize mergers in the health-care industry to limit cost increases to patients.

In a 4-0 vote, the agency’s commissioners ruled in March that ProMedica Health System Inc.’s planned purchase of St. Luke’s Hospital was anticompetitive and would lead to higher prices for acute-care and obstetric services in Toledo, Ohio.

The agency in 2010 pressured Universal Health Services Inc. (UHS:US) to sell 15 facilities to get approval to buy Psychiatric Solutions Inc.

In the Georgia case, the FTC contends that Phoebe Putney spurred the Hospital Authority of Albany-Dougherty County to buy Palmyra. Under a 1941 Georgia law, the authority has broad power to deliver hospital services that aren’t governed by antitrust statutes.

A combined Phoebe Putney-Palmyra would control 85 percent of the market, giving the hospitals the ability to increase reimbursement from insurers and leading to higher health costs for patients, according to the FTC.

The 11th Circuit court said the state legislature knew its law might create monopolies and that it was more important to ensure people had health care services.

The case is Federal Trade Commission v. Phoebe Putney Health System, 11-1160.

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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