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Published: Thursday, 1/6/2011

ProMedica challenged on St. Luke's takeover

WASHINGTON — The federal government is challenging Toledo-based ProMedica Health System's acquisition of St. Luke's Hospital in Maumee, claiming it violates federal antitrust laws and will result in more expensive health care for northwest Ohioans by allowing ProMedica to become too powerful.

ProMedica has been told to appear before a Federal Trade Commission administrative law judge for a May 31 trial in the nation's capital.

In addition, the FTC Friday plans to file a motion in U.S. District Court in Toledo for a temporary restraining order and preliminary injunction against ProMedica, asking a federal judge to freeze jobs and services at current levels until the case is decided in Washington, said Jeffrey H. Perry, deputy assistant director of the FTC bureau of competition.

Both FTC actions were authorized by 5-0 votes of its governing board.

In a 12-page complaint made public Thursday, the federal agency said ProMedica's acquisition of St. Luke's “threatens to substantially lessen competition for critical health-care services in Lucas County, Ohio.”

“This diminished competition will stifle beneficial quality improvements and will result in significant increases in health-care costs to local residents, many of whom are already struggling to keep up with rising medical expenses,” according to the complaint.

The agency, the complaint states, obtained documents which “reveal that a principal motivation for the acquisition was to gain enhanced bargaining leverage with health plans and the ability to raise prices for services.”

“These cost increases have real health-related consequences, as they inevitably force some employers to reduce or eliminate health-insurance coverage for their employees, force some families to drop their health insurance altogether, and cause others to delay or forgo checkups and other medical care that they can no longer afford,” the FTC complaint said.

Ohio Attorney General Richard Cordray, who leaves office next week, said Thursday he supports the FTC's decision to freeze services and to argue the case. He said he is “troubled by the threat posed by this merger to reduce competition and increase costs for hospital services in Lucas County — an area that already has some of the highest health-care costs in the state.”

ProMedica issued a statement saying it is “disappointed” by the FTC complaint. The company maintained St. Luke's was “in financial distress” and said the acquisition would keep the hospital open to provide services.

But the state and FTC have records, Mr. Cordray told The Blade, that show St. Luke's was a financially strong and viable competitor. “It is nowhere near any imminent closure or collapse,” he said.

Former U.S. Sen. and Ohio Attorney General-elect Mike DeWine said he has been briefed about the case by Mr. Cordray's office. He declined to say what his position will be once he takes office.

ProMedica said the FTC's actions contradict the general goals of federal health-care reform, claiming it needs St. Luke's to streamline services and operate more efficiently.

Mr. Perry disagreed.

“Health-care reform and the trend to clinical integration is not a blank check to acquire your competitor or eliminate competition,” he said. He said ProMedica wanted to absorb St. Luke's because the Maumee hospital was providing quality care at more affordable prices.

The merger would reduce the number of competitors for acute-care inpatient hospital services in Lucas County from four to three and the number of competitors for inpatient obstetrical services from three to two. Only two competitors remain in Lucas County for general acute-care hospital services, Mercy Health Partners and the University of Toledo Medical Center, the former the Medical College of Ohio.

ProMedica controls nearly 60 percent of Lucas County's market for acute-care inpatient hospital services and more than 80 percent of the county's market for obstetrical services, the FTC said.

ProMedica operates 283 medical facilities in Ohio and Michigan. Those include Toledo Hospital, Flower Hospital, and Bay Park Community Hospital. It also owns Paramount Health Care, northwest Ohio's largest health-maintenance organization. ProMedica had 2009 revenues of $1.6 billion, according to the FTC.



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