Tenet Healthcare and Methodist Le Bonheur agreed to call off Methodist’s $250 million acquisition of two Memphis-area hospitals after the sale triggered a lawsuit from the Federal Trade Commission.
The two hospital systems released a statement on Dec. 23 announcing that Tenet’s sale of two hospitals known as Saint Francis was called off in part because of the FTC’s lawsuit seeking to block the acquisition due to consolidation concerns.
“We have determined the best course for both organizations is to continue serving our communities independently,” said Saint Francis Healthcare CEO Sally Hurt-Deitch in a statement.
The FTC sued back in November to block the sale, arguing that it would give Methodist a large market share in the Memphis area.
FTC said that only four systems provide general services and if the deal goes through then Methodist would control about 60% of the Memphis market.
The agency was also worried the lack of competition would increase costs for patients.
Methodist and Tenet said in a statement back in November that they were reviewing the lawsuit and were bewildered by the move after the FTC did not halt similar transactions among health plans and providers.
But the lawsuit is the latest move by the FTC to scrutinize hospital consolidation. The agency launched a probe in fall 2019 on the impact of hospital consolidation on prices and quality of care.
FTC cheered the decision by the two hospital systems to stop the sale.
“The FTC voted unanimously to challenge this hospital transaction because it would have eliminated competition between two of the only four hospital providers and left providers worse off as a result,” said Daniel Francis, FTC’s deputy director of the FTC’s Bureau of Competition. “That outcome has been avoided.”