Piedmont Healthcare’s recent hospital acquisitions have drawn the ire of National Nurses United (NNU), which wrote a letter to the Federal Trade Commission (FTC) Tuesday arguing that the deals could give the health system monopoly power in the Atlanta area.
Piedmont’s additional purchases across nearby Augusta and Macon similarly stand to boost its local market share and help the system “dominate” the broader region, the nurses union said.
These deals and others across the state suggest that Georgia is “being rapidly divided up by large providers” and “calls into question the competitive nature of hospital markets in the state,” NNU Southern Region Director Bradley Van Waus wrote in the letter addressed to FTC acting Deputy Director Heather M. Johnson.
“We believe it is contrary to the public interest for Piedmont Healthcare to gain monopoly power in the Atlanta area—therefore we call on the [FTC] to investigate the competitive concerns these acquisitions raise beyond the preliminary review process of the Hart-Scott-Rodino pre-merger notification program,” Van Waus wrote. “In addition, we ask the FTC to request more information from the … parties to further scrutinize how the transaction will impact competition.”
Piedmont Healthcare is a nonprofit system currently comprised of 11 hospitals, 35 urgent care centers, 25 retail pharmacy care locations and 555 physician practice locations, all of which are housed within Georgia.
In May, Piedmont announced two purchases that would bring its system up to 18 hospitals.
The first was a $950 million agreement to acquire four north Georgia and Macon hospitals from HCA Healthcare. Pending regulatory approval, the systems expected to close their deal by July 31.
The second was a nonbinding letter of intent to absorb University Health Care System, which would give Piedmont control over three hospital campuses—and other facilities in eastern Georgia and western South Carolina. The parties said they expected the deal to close later this year but did not disclose other terms.
NNU backed their position by calculating each deal’s resulting Herfindahl-Hirschman Index (HHI)—a measure of market concentration used by the FTC to classify markets and determine whether a merger warrants scrutiny.
HHI scores above 1,500 and 2,500 are considered by the FTC to be moderately and highly concentrated markets, respectively. Deals in these market concentrations that increase HHI by more than 100 points “raise significant competitive concerns and often warrant scrutiny,” according to the FTC’s horizontal merger guidelines (PDF).
By NNU’s calculation, the acquisition of HCA’s Cartersville Medical Center and Eastside Medical Center in Atlanta boosts Piedmont’s market share by 25%, resulting in a 157-point increase totaling 1,640 for that market.
“Such an increase of HHI in a moderately concentrated market would appear to warrant scrutiny by your agency,” Van Waus wrote.
Acquiring University Health would provide Piedmont with 49% of the market share in the adjacent Augusta market, while HCA’s other two hospitals give the nonprofit 17% of the Macon market, Van Waus noted.
While Piedmont’s deals were the primary focus of NNU’s concern, the group also called attention to mergers and acquisitions elsewhere across the state.
HCA Healthcare’s acquisition of the Meadows Regional Medical Center bumped the HHI of the Savannah metropolitan area up by 484 points and brought the full market into the FTC’s heavily concentrated tier, Van Waus wrote. In the state’s Rome market, HCA’s sale of Redmond Regional Medical Center to AdventHealth and Floyd Medical Center’s pending merger with Atrium Health would pull that market’s HHI up about 1,159 points to 4,896, he wrote.
“Since 2010, the HHI [of Georgia] has risen 120 percent, the fifth largest increase in market concentration in the country,” Van Waus wrote. “Moreover, with HCA Healthcare and University Health leaving the greater Atlanta market entirely, it concentrates the hospital industry even further, raising significant concerns for patients.”
Van Waus and NNU invoked data suggesting that provider consolidation increases the cost and quality of care. They also pointed to price differences between Atlanta and Las Vegas as well as Georgia and Florida, noting in both comparisons the higher market concentration and hospital charges of the out-of-state examples.
“In neighboring Florida … HCA Healthcare operates just under a quarter of hospitals and is the top provider in several key markets. The average Florida hospital charges on average $794 for every $100 spent on the care, the highest charge-to-cost in the country,” Van Waus wrote. “We fear without intervention, Georgia is posed to follow a similar trajectory.”
Healthcare consolidation has become a key concern for the FTC and the Biden administration alike. While the agency announced plans to study the impact of these deals back in January, this past week saw the president sign off on an executive order instructing the FTC and the Department of Justice to review and revise their standing guidelines regarding hospital mergers.
The latter action quickly drew responses from provider groups like the American Hospital Association and the Federation of American Hospitals, each of which characterized the order as misguided and a potential source of unnecessary bureaucratic red tape.