Court Strikes Down FTC’s Latest Attempt To Block Novant-CHS Deal

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The Federal Trade Commission’s case aiming to block Novant Health from acquiring two Community Health Systems-owned North Carolina hospitals was dealt a series of blows this week. On Tuesday, U.S. District Court Judge Kenneth Bell ruled to deny the antitrust agency’s latest preliminary injunction against the deal.

The FTC first sued to block the deal in January, claiming the $320 million purchase would decrease competition in the greater Lake Norman, North Carolina region and drive up consumer prices by allotting Novant nearly 65% control of the region’s inpatient market.

However, Bell ruled last week the sale could go forward as planned, reasoning that the hospitals were likely to shutter entirely absent a sale, which could harm care access in the region. The judge further argued that the deal could have a net positive impact on competition in the region by allowing Novant to better compete with the area’s largest healthcare provider, Atrium Health.

The FTC intends to fight that ruling in the 4th U.S. Circuit Court of Appeals. The antitrust agency filed its notice of appeal on Sunday, and petitioned a district court on Monday to pause the transaction during the appellate review.

However, Bell denied the FTC’s latest request for a preliminary injunction, again citing the risk of hospital closures.

“If Novant is not permitted to buy the hospitals, Davis will close ‘immediately,’ and certainly within the time frame of even an ‘expedited’ appeal (however long that might take in such a complex matter),” Bell wrote. “Closing Davis will result in the loss of critically needed inpatient psychiatric services, visiting real harm, not theoretical competitive harm, on numerous patients and their families.”

However, Bell did extend a temporary restraining order against the deal, barring the parties from closing until noon on June 21 to provide the appellate court more time to consider the case. Novant had previously been cleared to close its acquisition on Wednesday.

The judgments this week have been a blow to the FTC, which has increasingly sought to crack down on healthcare transactions.

The agency has had mixed results in court. Last year, the FTC successfully blocked a deal between John Muir Health and Tenet Healthcare. However, the FTC lost its case seeking to block UnitedHealth’s $13 billion buy of Change Healthcare in 2022, and last month a federal judge dismissed the FTC’s healthcare antitrust case against private equity firm Welsh, Carson, Anderson and Stowe.

Community Health Systems and Novant Health did not return requests for comment by press time.