The Federal Trade Commission (FTC) has filed a lawsuit seeking to block John Muir Health's proposed acquisition of San Ramon Regional Medical Center from Tenet Healthcare Corporation. The FTC argues that the deal, valued at $142.5 million, would lead to higher healthcare costs for residents in the region. Tenet is the majority owner of San Ramon Medical, and John Muir plans to take full ownership in the proposed transaction.
The FTC contends that the acquisition by John Muir Health would result in reduced competition and potentially harm consumers by driving up costs. According to Henry Liu, director of the FTC's Bureau of Competition, San Ramon Medical currently offers more affordable services, and the acquisition could lead to higher charges for acute care services with less motivation for improvements.
If the deal proceeds, the FTC argues that John Muir Health would control over 50% of the inpatient hospital market along the I-680 corridor in the San Francisco Bay area. The potential outcome, as per the FTC, would be increased insurance premiums, co-pays, deductibles, and other out-of-pocket costs or reduced benefits for commercial health insurance enrollees.
This legal action reflects the Biden administration's more aggressive approach to scrutinizing hospital and healthcare mergers, particularly those that might negatively impact competition and consumer costs. The FTC voted unanimously to file an administrative complaint and seek a temporary restraining order to prevent the deal from moving forward.
John Muir Health, a nonprofit health system, has owned 49% of San Ramon Medical since 2013. The proposed acquisition was announced in January 2022, with John Muir expressing his belief in the deal's benefits for the community, caregivers, patients, and the organizations involved.
This legal action adds to the recent instances where federal regulators, including the FTC, have intervened to block or scrutinize hospital mergers and acquisitions. The healthcare industry has witnessed increased scrutiny, and regulators are closely examining deals that could impact competition, costs, and access to care.
As the legal proceedings unfold, the outcome will shed light on the level of regulatory oversight and intervention in healthcare transactions, emphasizing the importance of considering the potential impact on consumers and market competition in such deals.