CHICAGO — Officials at Ohio-based Promedica Health System Inc. said they would go to the U.S. Supreme Court if necessary after a federal appeals court ruled the system cannot merge with another local provider.
The decision comes four years after Promedica signed a merger agreement with struggling St. Luke's Hospital.
The U.S. Court of Appeals for the Sixth Circuit in Cincinnati on April 22 upheld the Federal Trade Commission's challenge to a union between Promedica, a leading health care system in northwest Ohio, and St. Luke's.
The three-judge court panel unanimously agreed with the FCC that the joinder is anti-competitive and illegal, giving Promedica too much pricing power in Lucas County with both insurers and patients.
"The 6th Circuit's decision affirming the commission's ruling is a victory for the residents of Lucas County, Ohio, and ensures that they will continue to benefit from competition," FTC Chairman Edith Ramirez said in a statement.
The FTC ruled in January 2011 that the merger with St. Luke's would be illegal. The merger would reduce the number of competitor hospitals in the county to three from four. Promedica had 47% of market share in Lucas County as of 2009, according to the court ruling. After the merger, it would have more than 50% of market share.
Toledo-based Promedica filed its appeal to the circuit court in 2012.
The three-member panel voted unanimously to reject Promedica's bid. The merger would "result in a tremendous increase in concentration in a market that already was highly concentrated and the merger would make Promedica dominate in southwest Lucas County," the ruling said. "The correlation between market share and price reflects a correlation between market share and market power; and the [data] strongly suggest that this merger would enhance Promedica's market power even more, to levels rarely tolerated in antitrust law."
Promedica officials, in a statement, said they were "extremely disappointed by the decision and intend to appeal."
"In the meantime, we would like to emphasize that St. Luke's Hospital remains a member of Promedica," the statement said. "St. Luke's will continue to operate as normal as we pursue additional legal options."
The FTC 2011 challenge has prevented a full merger between the two systems, which instead operate in partnership.
Hospital officials can request a re-hearing at the 6th Circuit Court asking for a full review by 15 judges or go the US Supreme Court.