The Federal Trade Commission has authorized an administrative complaint, and authorized a suit in federal court, to block the proposed merger of Rhode Island’s two largest healthcare providers, alleging the deal would lead to higher prices and lower quality care. The FTC, jointly with the Rhode Island Office of the Attorney General, will file a complaint in federal district court seeking a temporary restraining order and preliminary injunction to stop the deal and to maintain the status quo pending an administrative trial on the merits of the case.
“This proposed merger is a bad deal for patients who are likely to see higher hospital bills, lower quality of care, and fewer cutting-edge medical services,” said FTC Bureau of Competition Director Holly Vedova. “By eliminating competition between Lifespan and Care New England, this merger would create a new healthcare conglomerate with outsized power over the entire continuum of healthcare services. As this country struggles to recover from a devastating pandemic, we can’t afford to allow this kind of concentrated control over critical healthcare services. I am pleased to partner with the Rhode Island Attorney General in suing to block this illegal merger to preserve patient choice.”
Lifespan Corp. and Care New England Health System 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, or GAC, services. They also operate the only two standalone inpatient behavioral health facilities in Rhode Island.
The complaint alleges that the proposed merger of close competitors Lifespan and Care New England would likely reduce competition in the state of Rhode Island and 19 nearby Massachusetts communities for inpatient general acute care hospital services and inpatient behavioral health services.
According to the complaint, the merger would increase the combined firm’s ability to raise hospital rates, and individuals would likely face higher premiums, co-pays, and deductibles. Similarly, if the merger is consummated, the combined healthcare system will have reduced incentives to invest in vital non-price dimensions of competition, such as quality of care, access to services, and technology, and Rhode Islanders will lose their ability to choose between two competing healthcare systems, according to the complaint.
The complaint alleges that if the merger is consummated, Lifespan and Care New England will control at least 70 percent of the Rhode Island market for inpatient general acute care hospital services and at least 70 percent of the market for inpatient behavioral health services. The FTC alleges that in all these markets, the merger violates Section 7 of the Clayton Act.
The Commission vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 4-0. Commissioner Rebecca Kelly Slaughter, joined by Chair Lina M. Khan, issued a concurring statement. The federal court complaint and request for preliminary relief will be filed in the U.S. District Court for the District of Rhode Island to halt the transaction pending an administrative proceeding. The administrative trial is scheduled to begin on July 20, 2022.
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.