FTC Sues to Block Merger Between Utah Healthcare Rivals HCA Healthcare and Steward Health Care System

 The Federal Trade Commission has authorized an administrative complaint and a lawsuit in federal court to block the proposed merger between Utah healthcare competitors HCA Healthcare and Steward Health Care System. The agency alleges that the deal would eliminate the second and fourth largest healthcare systems in the Wasatch Front region, where approximately 80 percent of Utah’s residents live. The companies offer a broad range of essential medical and surgical diagnostic and treatment services that require an overnight hospital stay, known as inpatient general acute care services. 

“As the second and fourth largest healthcare systems in the Wasatch Front region of Utah, which surrounds Salt Lake City, HCA Healthcare and Steward Health Care System help to keep costs down for consumers by competing vigorously with each other,” said FTC Bureau of Competition Director Holly Vedova. “The result is lower prices and more innovative services for patients and their families. If these companies merge, this competition will be lost, and Steward will no longer be available to patients as a low-cost provider in this region.”

HCA Healthcare and Steward Health Care System compete for inclusion in insurer networks, and for health care quality, service lines, and nurse and physician recruitment. HCA is a Nashville, Tennessee-based for-profit healthcare system with 182 hospitals in the United States and abroad. Steward is a for-profit healthcare system headquartered in Dallas, Texas. Steward has 41 hospitals in the United States and abroad. The complaint also names Steward’s CEO and controlling majority shareholder, Ralph de la Torre, M.D.

Among other things, the complaint alleges that the acquisition would:

  • Reduce the number of healthcare systems offering inpatient general acute care hospital services. In some Utah markets, the reduction would be from three competitors to two, and in another, from four competitors to three.
  • Increase market concentration levels significantly. Inpatient general acute care hospital services sold to commercial insurers and their members are already concentrated in each of the geographic markets; and
  • Eliminate Steward as a low-cost competitor. This would enable HCA to command even higher reimbursement rates. Commercial insurers are likely to pass on at least a portion of those higher healthcare costs to employers and health plan members in the form of increased premiums, deductibles, co-pays, and other out-of-pocket expenses.

The Commission vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 5-0. The federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the District of Utah to halt the transaction pending an administrative proceeding. The administrative trial is scheduled to begin on Dec. 13, 2022. 

A public version of the complaint will be available and linked to this news release as soon as possible.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.

By Percy