H2C Briefing Report Update: Federal Trade Commission vs. Phoebe Putney Health System
posted on April 8, 2015

The Federal Trade Commission has entered into a settlement with Phoebe Putney Health System, Inc., the Hospital Authority of Albany-Dougherty County, and HCA Inc. resolving the Commission’s charge that the Hospital Authority’s acquisition of Palmyra Park Hospital, Inc. from HCA Inc. – which created an effective hospital monopoly in the Albany, Georgia area – was anticompetitive. This consent agreement follows a significant Supreme Court victory in 2013 that reaffirmed the narrow scope of state action immunity and allowed the Commission to challenge this transaction.  Due to the unavailability of structural relief, the consent does not require a divestiture.

“While we continue to have reason to believe that Phoebe Putney’s acquisition of Palmyra violated Section 7 of the Clayton Act and Section 5 of the FTC Act, any relief attempting to restore the competition lost as a result of the merger is precluded by Georgia’s strict CON [Certificate of Need] requirements,” the Commission wrote in a statement. Although a divestiture was available when the Commission filed this case, an Eleventh Circuit decision allowing the parties to consummate the transaction gave rise to the circumstances that the Commission ultimately determined precluded a divestiture here.  

Under the consent agreement with the FTC , Phoebe Putney and the Hospital Authority must notify the FTC in advance of acquiring any part of a hospital or a controlling interest in other healthcare providers in the Albany, Georgia area for the next 10 years, and will be prohibited from objecting to regulatory applications made by potential new hospital providers in the same area for up to five years.

The settlement announced today is similar to the one proposed in 2013. Like the earlier settlement, it: requires Phoebe Putney and the Hospital Authority to give the FTC prior notice before acquiring any part of a hospital or a controlling interest in other healthcare providers in the Albany, Georgia area; prohibits the Hospital Authority and Phoebe Putney from opposing a Certificate of Need application for a general acute-care hospital in the Albany area; contains a stipulation that the effect of the transaction may be substantially to lessen competition within the relevant service and geographic markets alleged in the complaint.

The Commission vote to make the consent order final was 3-0-2, with Commissioners Joshua D. Wright and Terrell McSweeny not participating.