FTC Staff Provides Public Comment and Testimony in Tennessee Opposing Certificate of Public Advantage Application

Staff Finds Likely Harm to Consumers Outweighs the Potential Benefits of the Merger

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The Federal Trade Commission staff submitted a comment to the Tennessee Department of Health that opposes issuing a certificate of public advantage (COPA) to Mountain States Health Alliance and Wellmont Health System. If approved, the COPA could allow the merger of Mountain States and Wellmont, the two largest healthcare systems in northeast Tennessee and southwest Virginia, to proceed with regulatory oversight from the State of Tennessee. A separate, but similar COPA process is pending in Virginia.

As in the previous comment submitted in Virginia, staff of the FTC’s Bureau of Competition, Bureau of Economics, and Office of Policy Planning expressed concern that the proposed merger of Mountain States and Wellmont would lead to significantly less competition for healthcare services in southwest Virginia and northeast Tennessee. The written comment for Tennessee states that “the proposed merger presents substantial risk of serious competitive and consumer harm in the form of higher healthcare costs, lower quality, reduced innovation, and reduced access to care,” and that the harm would not be outweighed by any potential benefits of the merger. Moreover, the staff comment posits that any oversight from the state would be unlikely to mitigate the harm resulting from the loss of competition between the two health systems.

FTC staff also delivered oral remarks at a public hearing before the Tennessee Department of Health in Johnson City, Tennessee, concluding that the COPA should be denied. Alexis Gilman, Assistant Director for the Mergers IV Division of the FTC, stated that the FTC appreciates the serious healthcare challenges faced by the local community, and encourages ongoing regional and state level efforts to address these problems. “The hospitals, however, have not sufficiently justified why this highly anticompetitive merger is necessary and the only way to achieve their claimed benefits,” Gilman said.

The Commission vote to issue the staff public comment and to present public oral testimony to the Tennessee Department of Health was 3-0. (FTC File No. 1510115; the staff contacts are Goldie Walker, Bureau of Competition, 202-326-2919, and Stephanie Wilkinson, Office of Policy Planning, 202-326-2084).

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