FTC brings suit to block Utah hospital merger

John Rogers 

Portraying the two companies as competing rivals in Utah, the Federal Trade Commission has brought an administrative complaint and a lawsuit in federal court to block the proposed merger between Utah hospital operators HCA Healthcare and Steward Health Care System.

HCA Healthcare, which operates as MountainStar Healthcare in Utah, said in September it had acquired Steward’s five Utah hospitals. It also entered into an agreement to lease the related real estate from the owner following the closing. The hospitals were slated to become part of HCA Healthcare’s Mountain Division, which includes hospitals in Utah, Idaho and Alaska. No monetary amount for the acquisition was announced.{mprestriction ids="1,3"}

The FTC, however, sued to stop the merger that it says would eliminate hospital competition along the Wasatch Front region. HCA and Steward — both for-profit systems — compete for inclusion in insurer networks and for healthcare quality, service lines and nurse and physician recruitment, the FTC said.

The Steward Health Care hospitals in Utah include Davis Hospital in Layton, Jordan Valley Medical Center in West Jordan, Jordan Valley Medical Center-West Valley Campus, Mountain Point Medical Center in Lehi and Salt Lake Regional Medical Center in Salt Lake City.

HCA Healthcare’s MountainStar hospitals in Utah include Brigham City Community Hospital, Cache Valley Hospital in North Logan, Lakeview Hospital in Bountiful, Lone Peak Hospital in Draper, Mountain View Hospital in Payson, Ogden Regional Medical Center, St. Mark’s Hospital in Salt Lake City and Timpanogos Regional Hospital in Orem.

HCA is a Nashville, Tennessee-based system with 182 hospitals in the U.S. and abroad. Steward, headquartered in Dallas, Texas, has 41 hospitals in the U.S. and abroad.

The FTC vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 5-0, the commission announced. The federal court complaint and request for preliminary relief was filed in the U.S. District Court for the District of Utah to halt the transaction pending an administrative proceeding, the FTC said. The administrative hearing is scheduled to begin on Dec. 13. 

HCA Healthcare CEO Sam Hazen said at the time the merger was announced that the addition of these facilities would help improve healthcare network options for patients and enable investments in services. But the FTC contends that the acquisition would reduce the number of healthcare systems offering inpatient general acute care hospital services. In some Utah markets, the reduction would be from three competitors to two, and in another, from four competitors to three, the FTC said.

“As the second- and fourth- largest healthcare systems in the Wasatch Front region of Utah, which surrounds Salt Lake City, HCA Healthcare and Steward Health Care System help to keep costs down for consumers by competing vigorously with each other,” said FTC Bureau of Competition Director Holly Vedova. “The result is lower prices and more innovative services for patients and their families. If these companies merge, this competition will be lost, and Steward will no longer be available to patients as a low-cost provider in this region.”

“We are deeply disappointed in the decision by the Federal Trade Commission,” Steward said in a statement. “We believe the FTC has misread the pro-competitive potential of this transaction and completely ignored the fact that the market is, in fact, dominated by two different major health systems. The FTC’s analysis is also based on antiquated methods that do not take into account such things as outpatient migration patterns. As such we will continue to advocate strongly for this sale that would not only support continued investment, but also expand care options for communities across the state of Utah, driving down healthcare costs and continuing to increase quality. We are exploring a variety of options and upon further review, we will make a determination regarding the next steps. Steward Health Care is committed to providing patient-centered, high-quality healthcare and believes the transaction would bring increased access and improved competition to this market.”{/mprestriction}