County Pulse: Feds eyeing health care mergers, including Tenet acquisition of Emanuel

Posted by Ken Carlson on July 11, 2013 

— It turned out the Federal Trade Commission is reviewing Tenet Healthcare's acquisition of Turlock's Emanuel Medical Center to make sure it isn't bad for consumers who use hospital services.

So the deal is on hold until the agency is through analyzing the proposed $131 million purchase, which would give Tenet a third hospital in the Northern San Joaquin Valley and end Emanuel's 96-year run as an independent community hospital.

These days, the FTC keeps a close watch on mergers in the health care industry, and not just when a large company buys a couple dozen hospitals in a single acquisition. The agency is responsible for enforcing anti-trust laws, and recent cases are examples of the competition issues the regulators think are important.

Last month, a hospital authority in Albany, Georgia agreed to stop the integration of two hospitals until a judge rules on an FTC complaint that the merger would mean less competition and higher costs for patient services.

In March, the FTC filed papers in federal court to stop St. Luke's Health System from acquiring Idaho's largest independent physician group. According to the complaint, combining the two entities would enable them to drive up rates for health care services. Generally speaking, having a smaller number of competitors in a region allows them to demand higher payments from insurers and patients.

The federal commission mostly works behind the scenes, requesting information from the parties involved. Its staff does not confirm or deny that the agency is looking at a merger and it may simply allow a merger to proceed without a public announcement.

If there are concerns about unfair competition or anti-competitive practices, the agency may seek a settlement from the buyer before allowing the merger or file action in federal court to block it.

Of course, consumer costs are not the only thing to consider with Emanuel's desire to merge with a larger organization. Materials submitted in the application for approval from the California attorney general showed the 209-bed hospital will struggle financially without its previous contract with Kaiser Permanente. That would, no doubt, lead to cuts to services and staff and mean less access to treatment that local patients may need.

Tenet has promised to maintain cardiac care, cancer treatment and core hospital services at Emanuel and also invest in service improvements and medical staff development.

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