FTC sues to block Novant Health’s $320M deal to acquire two local hospitals
CHARLOTTE, N.C. (QUEEN CITY NEWS) — Federal officials sued to block Novant Health’s $320 million purchase of two local hospitals from Community Health Systems, Inc., on Friday.
The Federal Trade Commission alleges that Novant Health’s proposed multimillion-dollar deal will raise prices and reduce incentives in quality and care in Iredell and Mecklenburg counties.
The proposed deal from February 2023 involves Mooresville’s Lake Norman Regional Medical Center and Statesville’s Davis Regional Medical Center. The medical organization would buy the two hospitals from Tennessee-based Community Health Systems.
The federal agency issued an administrative complaint, in addition to filing the lawsuit, saying it had reason to believe that the law had been or was being violated, and it appeared to the FTC that a proceeding was in the public interest.
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If the deal goes through, Novant would acquire Lake Norman Regional Medical Center, just miles from Novant’s Huntersville Medical Center.
Novant’s plans for Statesville’s Davis Regional Medical Center, a behavioral health hospital, included taking over a physician group of 24 physicians employed by Lake Norman Regional Medical Center, a majority interest in an endoscopy center in Mooresville, and an entity holding a North Carolina certificate of need to build an ambulatory surgery center in Mooresville.
“Hospital consolidations often lead to worse outcomes for nurses and doctors, result in higher prices, and can have life and death consequences for patients,” said Henry Liu, Director of the FTC’s Bureau of Competition, in a written statement. “There is overwhelming evidence that Novant’s deal with Community Health Systems will be detrimental to patients in the Eastern Lake Norman Area, leading to higher out-of-pocket costs for critical health care services.”
The FTC said Novant serves more patients than any other hospital in the eastern Lake Norman Area. Novant is one of the most expensive hospital systems in North Carolina, according to the FTC’s administrative complaint.
In new documents, the FTC said the deal would let Novant control nearly 65 percent of the market for inpatient general acute care ‘GAC’ services in the eastern Lake Norman area of North Carolina, primarily including Iredell County and northern Mecklenburg County. Inpatient ‘GAC’ services include a broad range of essential medical, surgical, and diagnostic services that require an overnight hospital stay.
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The FTC alleges that Novant could demand higher service rates and increase annual healthcare costs by several million dollars, with the bill going to patients. The deal could also reduce Novant’s incentive to compete to attract patients by improving its facilities, service offerings, and quality of care, the lawsuit states.
The FTC voted 3-0 to issue the administrative complaint and authorize staff to seek a temporary restraining order and a preliminary injunction. The FTC stated that the federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the Western District of North Carolina to halt the transaction pending an administrative proceeding.
Novant Health responded to the lawsuit with the following statement:
As a nationally recognized leader in quality and patient safety, Novant Health is committed to delivering the highest-quality, patient-centered, physician-directed care to the communities served by Lake Norman and Davis Regional Medical Centers.
We will pursue available legal responses to the FTC’s flawed position and vigorously defend our commitment in court. We remain confident that Novant Health can bring exceptional care, leading-edge innovation, and long-term stability to Lake Norman and Davis Regional Medical Centers for these reasons.
Novant Health
This is a developing story. Check back for updates.
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