Two rival hospitals in Terre Haute, Indiana, pulled again their merger software Monday, simply days earlier than the state was as a consequence of rule on the deal amid rising backlash to such medical monopolies.
The proposed merger between Union Health and Terre Haute Regional Hospital, the one acute care hospitals in Vigo County, Indiana, would have left Terre Haute’s 58,000 residents and people within the surrounding region with a single hospital operator. Although federal legal guidelines prohibit monopolies, the hospitals sought the merger underneath a state provision often known as a “Certificate of Public Advantage” regulation, or COPA.
“Recognizing the COPA process is a very complex, innovative approach to improving access and quality health care for area residents, we believe it is best to withdraw the current application,” Union Health said in a statement posted on its web site.
Union mentioned it plans to submit a brand new software after working with Indiana regulators to “ensure the benefits” resembling “improved access, quality” are included.
The withdrawal got here 9 days earlier than a Dec. 4 deadline for state regulators to rule on whether or not to OK the merger. In latest months, the state well being company had received a deluge of public comments from residents and the Federal Trade Commission against the deal between Union Health, a nonprofit whose predominant hospital is licensed as a 341-bed facility, and the 278-bed Terre Haute Regional Hospital, owned by for-profit chain HCA Healthcare. The commenters cited issues about longer journey instances to get emergency care, increased costs, and fewer decisions.
Union Health and HCA declined to reply questions on what prompted the choice to tug again the appliance.
“There could be any number of reasons why they pulled the application with the stated intention to refile,” mentioned Christopher Garmon, a University of Missouri-Kansas City economist who has studied COPA mergers. Given the standing of the appliance, he mentioned, it’s unlikely the deal was headed towards an approval. “Either way, I think it’s clear that the state was not ready to approve the COPA with conditions similar to past COPAs.”
It was the newest setback in opposition to mergers underneath COPA legal guidelines. Indiana and 18 different states have such legal guidelines that protect hospital mergers from federal enforcement by the Federal Trade Commission.
As a situation of the offers, states sometimes agree to observe hospital efficiency and high quality whereas limiting value hikes. Supporters of COPAs argue that state oversight constructed into the agreements can mitigate the harms of a monopoly. But well being economists and the FTC have mentioned that oversight can’t substitute competitors and that these mergers in the end hurt sufferers.
“We know that COPAs generally benefit the merging hospitals, but not local residents,” mentioned Zack Cooper, a well being economist and affiliate professor at Yale University.
His evaluation of the Terre Haute deal recommended that it could have broken the native financial system and squeezed residents’ wallets. Cooper mentioned he hopes that states confronted with related merger choices will see Indiana’s waylaid case and the pushback in opposition to different COPA mergers as a trigger for pause.
In feedback to Indiana regulators, the FTC mentioned COPAs “have proven unwieldy,” are “difficult to manage,” and “have failed to protect local communities from the harmful effects of anticompetitive hospital mergers.”
In 2018, Ballad Health shaped because the nation’s largest state-approved hospital monopoly, with COPA agreements in Virginia and Tennessee. Since then, KFF Health News has reported, Ballad has fallen short on assembly high quality and charity care objectives, in accordance with annual reviews from Ballad and the Tennessee Department of Health. After years of complaints from sufferers, the state is now trying to hold Ballad more accountable for its high quality of care.
Ballad Health has mentioned that “the most important thing to our patients is the quality of care they receive” and that its system is rebounding after hospital high quality slipped as a result of strain of the coronavirus pandemic.
Problems have additionally occurred when a COPA — and its oversight — are eliminated, leaving the merged hospital system as an “unregulated monopoly.” After North Carolina repealed its COPA in 2015, a subsidiary of HCA Healthcare purchased Mission Health, a COPA-created monopoly in Asheville, for $1.5 billion in 2019. The monopoly in Asheville remained, however not one of the COPA’s situations utilized to the brand new proprietor.
Last yr, authorities inspectors discovered “deficiencies” at Mission Health that contributed to 4 affected person deaths and posed an “immediate jeopardy” to sufferers’ well being and security, in accordance with the 384-page federal inspection report. HCA has mentioned it promptly addressed the problems. But the state and the hospital system at the moment are engaged in a lawsuit.
Four states in addition to North Carolina — Maine, Minnesota, Montana, and North Dakota — have repealed COPA legal guidelines. Maine ended its regulation final yr amid warnings from the FTC concerning such mergers.
Bill Montejo, a director at Maine’s Department of Health and Human Services, pointed to an FTC research as he urged lawmakers on a well being committee final yr to repeal its COPA regulation as a consequence of “the growing concerns about the ineffectiveness and potential negative effects of COPAs.”
The Union-Regional merger was years within the making. In 2021, Union Health leaders have been instrumental within the passage of Indiana’s COPA regulation. They provided draft language for the invoice to one of many invoice’s authors, in accordance with legislative testimony, and Union Health CEO Steve Holman testified earlier than lawmakers that the merger would enhance the county’s poor public well being rankings.
In 2023, Union Health and Regional had signed an settlement to merge, starting the COPA software course of.
Union faces a July 1, 2026, deadline to refile an software, in accordance with Indiana’s COPA regulation.
Samantha Liss:
sliss@kff.org,
@samanthann
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