Piedmont’s planned acquisition of 7 Georgia hospitals raises ‘monopoly’ concerns

ajc.com

Piedmont Healthcare announced in May its intention to expand by acquiring seven Georgia hospitals, and the sale of the first four was set to be final July 31.

Now, a nurses’ group has raised concerns and complained to the Federal Trade Commission, alleging that Georgia was being “rapidly divided up by large providers.” It asked that the commission investigate whether the consolidations would give Piedmont close to monopoly power in its area.

At issue are Piedmont’s agreement to buy four hospitals from HCA Healthcare —two in Macon and hospitals in Snellville and Cartersville — and its plan to have a regional hub in Augusta by partnering with University Health Care System, which has three hospital campuses and other medical facilities. If the deals are completed, Piedmont would have 18 hospitals, more than any other Georgia health care system.

The complaint comes at a time when President Biden has called on the FTC to scrutinize hospital mergers for indications they may increase prices and decrease competition. In an executive order earlier this month, the president noted that prices tend to be far higher at consolidated hospitals and suggested that consolidation had contributed to the closure of 138 rural hospitals in the U.S. since 2010.

Piedmont Healthcare declined to comment on the complaint, but the hospital groups involved in the proposed transactions said in press statements that the moves would improve health care for the communities involved.

“Our partnership with Piedmont will enable us to transform healthcare for the Augusta region,” Hugh Hamilton, chairman of the Richmond County Hospital Authority, said in a release from Augusta-based University Health Care System.

Kevin Brown, CEO of Piedmont Healthcare, said purchasing the HCA hospitals “means providing high-quality care that is seamlessly orchestrated. We look forward to further enhancing care across Georgia.”

A spokesman for the group that filed the complaint, National Nurses United, said that was a smokescreen, and that the real result would be higher prices and paring down services that don’t make a profit.

“A hospital should be a service, not a profit-making venture,” said Chuck Idelson, the spokesman for the national nursing union. “We’re asking the FTC to do what President Biden has asked them to do, to look at this and ask whether this move is in the best interest of the residents who the hospitals serve.”

Other hospital sales also at issue

A handful of hospital systems already own all the hospitals in the central Atlanta area, after Emory Healthcare in 2018 took over DeKalb Medical Center and Northside in 2019 took over Gwinnett Medical Center and its sister facilities.

Now the big groups are expanding outward into Georgia. The nurses’ group contends even that will have an impact on Atlanta.

By acquiring Eastside Medical Center in Snellville and Cartersville Medical Center, the complaint says, Piedmont’s market share in the Atlanta area will increase to 25%, decreasing competition.

Combined ShapeCaption
Eastside Medical Center in Sneville

Credit: Carrie Teegardin

Eastside Medical Center in Sneville

Credit: Carrie Teegardin

Combined ShapeCaption
Eastside Medical Center in Sneville

Credit: Carrie Teegardin

Credit: Carrie Teegardin

In the Augusta area, the complaint said the acquisitions would give Piedmont 49% of the market share. In the Macon area, they would give Piedmont 17%.

Other Georgia hospital sales also may warrant the FTC’s scrutiny, the group wrote. It cited HCA Healthcare’s acquisition earlier this year of Meadows Regional Medical Center in the Savannah area; and recent acquisitions in the Rome market that could increase market concentration.

In Rome, Floyd Medical Center is awaiting approval of a merger with Atrium Health, and HCA Healthcare announced it was selling Redmond Regional Medical Center to AdventHealth.

Hospitals have been under pressure to consolidate to gain market power in negotiations with suppliers and insurers. That can benefit the hospitals financially.

In its own announcement of the $950 million sale of the four hospitals to Piedmont, HCA gave a nod to the business benefits of dominating an area.

“The commitment of HCA Healthcare colleagues at these hospitals has helped the facilities achieve national recognition for quality patient care, even though these facilities were not able to fully benefit from a broader HCA Healthcare presence in their areas,” HCA said in its press release.

But consolidation also can allow them to charge higher prices, studies have shown.

Higher prices for consumers are likely what Georgians can expect from hospital mergers, said Niall Brennan, president of the Health Care Cost Institute, a nonprofit organization that examines health care spending. He spoke generally, not about the Piedmont deals specifically.

“If efficiencies are being generated, none of those efficiencies are being passed on to consumers,” Brennan said. “This has been analyzed empirically. And as surely as night follows day, higher prices follow hospital mergers.”

Other mergers stopped

The FTC has the authority to investigate hospital mergers, and if it finds a merger would substantially reduce competition, it can file suit to ask the federal courts to stop it. The agency can do that after a sale closes.

The FTC would not say whether it had an investigation of the Piedmont deals under way.

Earlier this year, an FTC investigation prompted two other Georgia hospital systems to drop their merger plans. The agency was investigating the proposed merger of Atrium Health Navicent and Houston Healthcare System, and its staff had determined that the merger would eliminate competition in the Macon-Warner Robins area, raise health care costs, and reduce incentives to invest in facilities and technologies.

The health care systems then called out their proposed merger.

Late last year, hospital systems in Tennessee called off a planned merger when FTC sued to try to block it.