HEALTHSOUTH Corporation

The Federal Trade Commission has given final approval to a consent agreement with Birmingham-based HEALTHSOUTH Corporation (formerly HEALTHSOUTH Rehabilitation Corporation), the nation's leading operator of rehabilitation hospitals and other rehabili- tation facilities. The consent settles charges that HEALTH- SOUTH's $180 million merger with ReLife Inc. would violate antitrust laws, and could raise prices or reduce services at rehabilitation hospital facilities in Birmingham, Alabama; Charleston, South Carolina; and Nashville, Tennessee. The Com- mission's action makes the consent order provisions binding on HEALTHSOUTH.

Under the final order, HEALTHSOUTH is required to divest Nashville Rehabilitation Hospital, which was owned by a ReLife- controlled partnership prior to the merger, to an entity that would operate the hospital in competition with HEALTHSOUTH. The divestiture must be completed within 12 months to an FTC-approved entity, and HEALTHSOUTH must operate the hospital independently pending divestiture. If the divestiture is not completed on time, the settlement permits the Commission to appoint a trustee to complete it.

In addition, the settlement requires HEALTHSOUTH to termi- nate management contracts to operate rehabilitation units at Medical Center East in Birmingham (which was managed by HEALTH- SOUTH) and Roper Hospital in Charleston (which was operated by ReLife). HEALTHSOUTH is required to relinquish management of the Medical Center East unit within 90 days, and of the Roper unit by Oct. 1, 1995.

The consent order also requires HEALTHSOUTH, for 10 years, to obtain FTC approval before merging -- by acquisition, lease, management contract or otherwise -- any of its rehabilitation hospital facilities in any of the three areas with any competing rehabilitation hospital facilities in those areas. The settle- ment also requires HEALTHSOUTH to give the Commission prior notice before carrying out certain joint ventures with competing rehabilitation hospital facilities in the three areas. The consent agreement was announced for a public-comment period on Dec. 29, 1994. The Commission vote to issue it in final form occurred on April 12, and was 5-0.

NOTE: A consent agreement is for settlement purposes only and does not constitute admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions by the respon- dents. Each violation of such an order may result in a civil penalty of up to $10,000.

A news release summarizing the complaint and consent agree- ment was issued at the time the Commission accepted the consent agreement for public comment. Copies of that release and of the complaint and final order are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

(FTC File No. 951 0007)

(Docket No. C-3570)