Indiana hospitals pull merger software after pushback over monopoly considerations

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 Well being 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 area with a single hospital operator. Though federal legal guidelines prohibit monopolies, the hospitals sought the merger beneath a state provision generally known as a “Certificates of Public Benefit” legislation, or COPA.

“Recognizing the COPA course of is a really complicated, revolutionary strategy to enhancing entry and high quality well being look after space residents, we imagine it’s best to withdraw the present software,” Union Well being mentioned in a press release posted on its web site.

Union mentioned it plans to submit a brand new software after working with Indiana regulators to “guarantee the advantages” akin to “improved entry, high 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 current months, the state well being company had acquired a deluge of public feedback from residents and the Federal Commerce Fee against the deal between Union Well being, a nonprofit whose principal 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 considerations about longer journey instances to get emergency care, greater costs, and fewer selections. 

Union Well being and HCA declined to reply questions on what prompted the choice to tug again the applying.

“There might be any variety of the explanation why they pulled the applying with the said intention to refile,” mentioned Christopher Garmon, a College of Missouri-Kansas Metropolis economist who has studied COPA mergers. Given the standing of the applying, he mentioned, it is unlikely the deal was headed towards an approval. “Both method, I feel it is clear that the state was not able to approve the COPA with circumstances just like previous COPAs.” 

It was the most recent setback in opposition to mergers beneath COPA legal guidelines. Indiana and 18 different states have such legal guidelines that protect hospital mergers from federal enforcement by the Federal Commerce Fee.

As a situation of the offers, states sometimes agree to observe hospital efficiency and high quality whereas limiting worth hikes. Supporters of COPAs argue that state oversight constructed into the agreements can mitigate the harms of a monopoly. However well being economists and the FTC have mentioned that oversight can not change competitors and that these mergers finally hurt sufferers.

“We all know that COPAs typically profit the merging hospitals, however not native residents,” mentioned Zack Cooper, a well being economist and affiliate professor at Yale College.

His evaluation of the Terre Haute deal recommended that it will have broken the native economic system and squeezed residents’ wallets. Cooper mentioned he hopes that states confronted with comparable merger selections 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 confirmed unwieldy,” are “troublesome to handle,” and “have failed to guard native communities from the dangerous results of anticompetitive hospital mergers.”

In 2018, Ballad Well being fashioned because the nation’s largest state-approved hospital monopoly, with COPA agreements in Virginia and Tennessee. Since then, KFF Well being Information has reported, Ballad has fallen quick on assembly high quality and charity care targets, in accordance with annual reviews from Ballad and the Tennessee Division of Well being. After years of complaints from sufferers, the state is now attempting to carry Ballad extra accountable for its high quality of care. 

Ballad Well being has mentioned that “an important factor to our sufferers is the standard of care they obtain” and that its system is rebounding after hospital high quality slipped as a result of strain of the coronavirus pandemic.

Issues 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 Well being, a COPA-created monopoly in Asheville, for $1.5 billion in 2019. The monopoly in Asheville remained, however not one of the COPA’s circumstances utilized to the brand new proprietor.

Final yr, authorities inspectors discovered “deficiencies” at Mission Well being that contributed to 4 affected person deaths and posed an “quick jeopardy” to sufferers’ well being and security, in accordance with the 384-page federal inspection report. HCA has mentioned it promptly addressed the problems. However the state and the hospital system at the moment are engaged in a lawsuit.

4 states apart from North Carolina — Maine, Minnesota, Montana, and North Dakota — have repealed COPA legal guidelines. Maine ended its legislation final yr amid warnings from the FTC relating to such mergers.

Invoice Montejo, a director at Maine’s Division of Well being and Human Companies, pointed to an FTC research as he urged lawmakers on a well being committee final yr to repeal its COPA legislation as a consequence of “the rising considerations concerning the ineffectiveness and potential destructive results of COPAs.”

The Union-Regional merger was years within the making. In 2021, Union Well being leaders have been instrumental within the passage of Indiana’s COPA legislation. They equipped draft language for the invoice to one of many invoice’s authors, in accordance with legislative testimony, and Union Well being CEO Steve Holman testified earlier than lawmakers that the merger would enhance the county’s poor public well being rankings.

In 2023, Union Well being 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 legislation.