Judge rules in favor of FTC over ProMedica issue

12/5/2011

An administrative law judge has ruled in favor of the Federal Trade Commission, agreeing that St. Luke’s Hospital’s partnership last year with ProMedica is anti-competitive, the hospitals were notified late Monday.

The judge’s decision, however, will be appealed to the commission, ProMedica said in a statement Monday. St. Luke’s, it said, will remain part of ProMedica through the appeals process.

While the judge’s decision is disappointing, it is not surprising, ProMedica said in the statement. If the commission does not side with ProMedica in the next step, the company can take its appeal to the Sixth Circuit Court of Appeals in Cincinnati.

“We remain completely committed to this partnership and believe it is the right thing to do for the community,” the statement said.

Details of the ruling were unavailable late Monday, and both an FTC spokesman and hospital officials said they had no other information to release.

Lawyers for the FTC have argued that, if the partnership forged last year is allowed, hospital rates could rise more than 56 percent at St. Luke’s and nearly 11 percent at other ProMedica hospitals. Divestiture to an approved acquirer within six months of winning their case is the remedy FTC lawyers want, according to documents filed as part of FTC administrative trial in Washington.

ProMedica has maintained the partnership is not anti-competitive, and it argued that the economic model an FTC expert used to derive hospital price increases was flawed. Officials, however, proposed having a separate team negotiate insurer contracts for the Maumee hospital in hopes of easing regulatory fears.

That approach would have been similar to a relationship the FTC used a few years ago to settle its case with Evanston Northwestern Healthcare Corp. in Illinois, where Highland Park Hospital has a separate insurer-negotiating team from Evanston and Glenbrook hospitals.

Both sides argued their case before the administrative law judge during an eight-week trial held sporadically over the summer.

Roughly 1½ years ago, regulators began to look into ProMedica’s merger with St. Luke’s. In March, the FTC received a preliminary injunction in U.S. District Court in Toledo so the partners couldn’t fully join.

While the anti-competitive question is being settled, ProMedica cannot reduce staffing or clinical services at St. Luke’s. The FTC has allowed the partners to make some joint moves, such as moving rehabilitation beds from St. Luke’s to Flower Hospital to free some space in the Maumee hospital.

Contact Julie M. McKinnon at: jmckinnon@theblade.com or 419-724-6087.