The Federal Trade Commission (FTC) recently announced that, after four years, it has reached a settlement agreement with the Phoebe Putney Health System and the Hospital Authority in Dougherty County, Georgia. The settlement is in regards to the FTC’s 2011 challenge of Phoebe Putney and the Hospital Authority’s acquisition of its competitor, Palmyra Park Hospital Inc., as anticompetitive.

In its April 2011 complaint, the FTC alleged that Phoebe Putney attempted to shield its anticompetitive acquisition of Palmyra Park through a deal specifically structured to protect the acquisition from federal antitrust scrutiny.

Even though the FTC stated that it still believes that this acquisition violated both Section 7 of the Clayton Act and Section 5 of the FTC Act, it is unable to require its favored divestiture remedy due to constraints by Georgia’s Certificate of Need (CON) laws. Under Georgia CON regulations, over-bedding of a region make it extremely difficult for a buyer to obtain the required CON permit to operate a divested, independent hospital. Importantly, the Albany Georgia region where Phoebe Putney and Palmyra Park are located is considered over-bedded, thus effectively precluding a divestiture order in this settlement.

The FTC voted to make the consent order final, decidedly settling the administrative litigation against Phoebe Putney. The consent agreement includes a requirement that, for the next 10 years, Phoebe Putney and the Hospital Authority provide the FTC with advance notice of any plans to acquire any Albany, Georgia, healthcare providers. The agreement also prohibits Phoebe Putney and the Hospital Authority from “objecting to regulatory applications made by potential new hospital providers” in the Albany, Georgia, area “for up to five years” including Certificate of Need applications. Finally, the agreement requires the parties to stipulate “that the effect of the transaction may be substantially to lessen competition within the relevant service and geographic markets alleged by the complaint.”

For a copy of the consent agreement, click here.