CHICAGO — The U.S. Federal Trade Commission last week filed a pair of complaints against Promedica Health System Inc., a leading health care system in northwest Ohio, charging that its acquisition of a rival hospital is anticompetitive and would allow the Toledo-based system to unfairly raise prices for services.
Promedica acquired St. Luke’s Hospital, located in Lucas County, on Aug. 31. The deal boosted to four the number of acute-care hospitals Promedica now operates in the county.
The system operates seven additional hospitals throughout the region.
The FTC’s Jan. 6 complaint alleges that the acquisition could significantly harm patients, employees, and local employers by allowing Promedica to raise prices. A separate complaint filed Jan. 7 is seeking an order that would require St. Luke’s to be preserved as an independent entity until the matter is settled.
The federal complaint comes as Promedica prepares to enter the market Thursday with $270 million of fixed-rate bonds. Proceeds from the deal would be used to refund existing debt and finance capital projects. Lucas County will issue the bonds on Promedica’s behalf.
It’s uncertain whether the bond sale will continue as scheduled. Promedica officials did not return calls by press time.
A hearing before a FTC administrative law judge is scheduled for May 31.
Moody’s Investors Service rates the system Aa3 and Standard & Poor’s rates it AA-minus. Moody’s analysts generally consider the St. Luke’s acquisition a strength, saying it will enhance the system over the long term while perhaps pressuring operating margins in the short term due to St. Luke’s large operating losses.
Despite the FTC’s complaint that Promedica has an unfair advantage over competitors, Moody’s said that one of the system’s challenges is the presence of a sizable competitor — Mercy Health Partners, part of Catholic Healthcare Partners.
Analysts said the system’s expansion policy is important for its continued health given the weak demographics of northwest Ohio, where unemployment is high and population growth is stagnant.
After last year’s deal, Moody’s upgraded its rating on St. Luke’s Hospital to Aa3 from Baa2.