FTC urges Texas regulators to block CHS’ divestiture of 2 hospitals

The Federal Trade Commission is urging Texas regulators to block Franklin, Tenn.-based Community Health Systems’ planned divestiture of two hospitals in the state.

In April, CHS announced its intent to sell the 231-bed Abilene (Texas) Regional Medical Center to Abilene-based Hendrick Health System and its 171-bed San Angelo (Texas) Community Medical Center to Shannon Health System in San Angelo. 

The Texas Health and Human Services Commission ultimately will approve or block the proposed transactions as Texas implemented a law that shields the deals from federal oversight in exchange for state oversight.

In a letter to the Texas commission, the FTC argues that if the deals are allowed to move forward, the combinations would remove competition in the markets, resulting in higher prices and harming consumers.

Particularly, if Hendrick Health System is allowed to purchase Abilene Regional, the combined organization would have an 85 percent market share of inpatient services in the region, the FTC said. 

“Hendrick competes vigorously with Abilene Regional to be included in health plan networks and to attract patients. The proposed Hendrick merger would eliminate this competition and would likely lead to increased prices and reduced quality and availability of healthcare services in Midwest Texas,” the FTC wrote in the letter. 

In addition, the FTC argues that if the divestiture of San Angelo Community Medical Center to Shannon Health moves forward, the combined organization will have a 62.3 percent market share of inpatient hospital services and would have concentration numbers that “approach monopoly levels.”

Read the full letter here

More articles on healthcare industry transactions: 
Illinois system to join Northwestern Medicine
FTC’s challenge of Jefferson-Einstein merger heads to court Sept. 14: What health system leaders should know
Hospital M&A update: 11 recent deals


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