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<em>The past is never dead. It's not even past. -William Faulkner</em>

Speaking at an American Bar Association symposium titled "Retrospective Analysis of Agency Determinations in Merger Transactions," Federal Trade Commission (FTC) Chairwoman, Edith Ramirez, highlighted the FTC's successful track record challenging transactions, but also noted "growing concern" that hospital acquisitions of physician groups are having a negative impact on consumers. In Chairwoman Ramirez's words, "we need some more study before we can proceed." So, is a retrospective investigation targeting hospital/physician transactions brewing at the FTC? In Chairwoman Ramirez's words, "stay tuned."

What a new retrospective investigation ultimately means for hospitals and physicians is far from clear. What is clear is that the last FTC retrospective review is credited by many as reinvigorating the FTC's hospital merger enforcement efforts. In the wake of the enforcement action that grew out of that review -- the 2004 challenge to Evanston Northwestern Healthcare's acquisition of Highland Park Hospital in 2000 -- the FTC has amassed an impressive undefeated record of at least 10-0 challenging transactions involving hospitals and/or physicians. Those challenges have involved both consummated and proposed transactions.

The FTC's turnaround is all the more impressive because both the FTC and the Antitrust Division of the U.S. Department of Justice had suffered a previous series of defeats in hospital merger cases, often because of difficulties in proving effects in relevant geographic markets.

Most recently, the threat of a challenge caused Capella Healthcare to abandon its plan to acquire rival Mercy Hot Springs health system in Hot Springs, Arkansas, for $167.5 million. According to the Statement of FTC Competition Director Richard Feinstein, the Bureau of Competition investigated the proposed transaction for months before telling Capella Healthcare and Mercy Hot Springs that the Bureau "had serious concerns about the likely anticompetitive harm that would have resulted if the transaction was completed, and that [the Bureau was] prepared to challenge the transaction."

Prior to that,
<ul>
	<li>Inova Health System and Prince William Health System withdrew their plans for a merger after the FTC filed a complaint in federal district court seeking an injunction pending an administrative trial (2008).</li>
	<li>Carilion Clinic agreed to sell two independent outpatient medical clinics it acquired to resolve an administrative complaint filed by the FTC (2009).</li>
	<li>Universal Health Services agreed to sell 15 psychiatric facilities as a condition of its $3.1 billion acquisition of Psychiatric Solutions, Inc. (2010).</li>
	<li>Although the case is currently on appeal to the U.S. Court of Appeals for the Sixth Circuit, ProMedica Health System was ordered to divest St. Luke's Hospital after a federal district court judge granted the FTC's request for a preliminary injunction, a full administrative trial on the merits and review by the Commission (2011).</li>
	<li>OSF Healthcare System abandoned its proposed acquisition of rival Rockford Health System after a federal district court granted the FTC's requested preliminary injunction pending a full administrative trial on the merits (2012).</li>
	<li>Renown Health agreed to release its staff cardiologists from "non-compete" contracts, allowing them to join competing cardiology practices to resolve FTC charges that its acquisitions of two local cardiology groups reduced competition in the Reno area (2012).</li>
	<li>Universal Health Services, Inc. agreed to sell an acute inpatient psychiatric facility to settle FTC charges that its proposed acquisition of Ascend Health Corporation would be anticompetitive (2012).</li>
	<li>Reading Health System abandoned its proposed acquisition of Surgical Institute of Reading L.P. after the FTC authorized its staff to seek a preliminary injunction in federal district court pending a full administrative trial (2012).</li>
	<li>Phoebe Putney Health System and Palmyra Park Hospital agreed to a stay to allow the Commission to consider a proposed consent resolving the matter (2013).</li>
</ul>
History and the FTC's current efforts in federal district court in Idaho to unwind St. Luke's Health System, Ltd.'s acquisition of Idaho's largest independent, multi-specialty physician practice group, Saltzer Medical Group P.A., certainly suggest that the FTC will not hesitate to pull the enforcement trigger on a consummated or proposed hospital/physician transaction in its crosshairs.

Is the FTC Setting Its Sights on Consummated Hospital and Physician Mergers?