Federal Trade Commission renews opposition to MSHA, Wellmont merger


(WJHL) – The Federal Government is doubling down in its attempt to block a Tri-Cities hospital merger deal.

Staff with the Federal Trade Commission came to Tennessee’s 6th public hearing in Blountville Tuesday night to try to convince the State of Tennessee not to approve the merger of Mountain States Health Alliance and Wellmont Health System.

The Tennessee Department of Health hosted what was likely the final public hearing before deciding whether to approve the merger.

Wellmont was the first hospital system to get things started back in 2014 — saying it wanted to merge with another company. On April second the following year, Wellmont and MSHA announced their plans to merge.

The first paperwork was filed to begin the approval process in September — and in February of 2016, they filed the applications for a certificate of public advantage. That’s a key document needed to complete the merger.

The COPA application in Virginia was deemed complete in August of that year. It was then deemed complete by the State of Tennessee in September.  But in October that year, the FTC openly opposed the merger for the first time.

At the request of the hospital systems, Tennesseee deemed the COPA application incomplete earlier this year. This was so MSHA and Wellmont could give the state more information about the merger.  It was deemed complete once more this past March.

Tuesday night, the applications in Virginia and Tennessee still have not been approved — only deemed complete.

For months, the FTC has opposed the proposed health care merger over multiple concerns including a lack of competition. Tennessee health leaders, the FTC, both hospital systems and the public all met under one roof to allow the citizens to weigh in.

The state heard from people on both sides of the issue. Like in previous hearings, vocal supporters showed up.

“The two health systems will be able to help our region live well by investing in programs that will decrease premature mortality,” Nancy Barker of the Rogersville Chamber of Commerce said.

As the commissioner of health listened – several said a combined health care company would improve the overall health of the region but a few others disagreed.

“I’m in opposition of this merger I agree with the FTC,” a citizen said.

That stance was repeated Tuesday night by an FTC staff member, specifically criticizing the latest evidence submitted by the health companies in favor of the deal.

“The additional information submitted in the consultants report have a lot of high-level statements about goals and objectives but don’t really have details on how any of it really is going to be accomplished, how much it’s going to cost to achieve and why they couldn’t do it by independently through a collaboration short of a merger or through ultimate means that have less uncompetitive effects,” Alexis Gilman, FTC’s Assistant director of the Mergers Four Division said.

Tennessee’s Commissioner of Health Dr. John Dreyzehner said this is unprecedented and after months of consideration he and his team are still deciding what’s best for our region.

“As the approving authority I continue to review the application, continue to take public input and have not yet made a decision,” Dr. Dreyzehner said.

The hospital systems remain confident Tennessee and Virginia law will shield them from federal opposition by insuring oversight protecting the public against a monopoly.

“But we believe that the state action immunity laws will ultimately allow this to happen,” Todd Norris of Wellmont Health System said.

Armed with more public comment – Commissioner Dreyzhner now has two months to make his decision.

“September 19 is the deadline for a decision and we will certainly make it by then if not before,” Dr. Dreyzhner said. The State of Virginia has until September 15.

The Federal Trade Commission’s newest comments come in response to three reports filed by the hospitals which support the merger.

In its response filed today, the FTC said its “deeply concerned that this proposed merger will cause significant and irreversible harm to competition and consumers in the region.”

FTC staff members said the reports didn’t contain sufficient analysis and evidence to support its claims.

The staff also said the reports overlook the benefits to consumers from competition and overstate the benefits of a merger to overall public health.

“Our concerns that the proposed merger likely would increase prices and decrease the quality of healthcare services in Northeast Tennessee and Southwest Virginia, as articulated in our prior public comments, remain. Fundamentally, the applicants’ supplemental reports provide no new information or analysis that changes FTC staff’s conclusion that the proposed merger is likely to significantly harm consumers in Northeast Tennessee and Southwest Virginia and that the COPA’s benefits do not exceed these harms by clear and convincing evidence.”

Gilman said the Federal Trade Commission will look for other opportunities to participate in the process, through any additional public hearings or any additional information submitted by the parties. Gilman said they will have to decide what to do if the merger is approved under the COPA and if they will take any further action.Copyright 2017 WJHL. All rights reserved.

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