Despite strong opposition from the Federal Trade Commission, the Tennessee Department of Health decided on September 19, 2017 to grant the Certificate of Public Advantage (COPA) application sought by Wellmont Health System and Mountain States Health Alliance for their merger. COPA statutes provide antitrust immunity for hospital mergers, provided the state actively supervises the merging parties. As some of the hospitals included in this merger are located in southwest Virginia, Wellmont and Mountain States have also sought a COPA from Virginia. A decision on the Virginia COPA is expected by September 30, 2017. The combined system plans to operate under the name Ballad Health and will have a total of 21 hospitals and numerous other health care services.
Wellmont and Mountain States started the Tennessee COPA process in 2015. The application process was lengthy and complex, with multiple filings and six public hearings. The FTC was sharply critical of the transaction, arguing that it would lead to virtual monopoly in hospital services in northeast Tennessee and southwest Virginia. Nevertheless, the Tennessee Department of Health determined that Wellmont and Mountain States had shown by clear and convincing evidence that the likely benefits accruing from the parties’ cooperative agreement outweighed any disadvantages from a reduction in competition.
The real issue now will be how actively Tennessee supervises Ballad Health under the COPA. Without active state supervision, there will be no antitrust immunity for a private entity such as Ballad.