The FTC recently provided yet another warning to healthcare organizations that they must take the time to analyze potential antitrust implications when considering an acquisition or consolidation. On August 6, the FTC and Nevada Attorney General announced the filing of a lawsuit and proposed consent decrees settling litigation filed against Renown Health, the largest hospital provider in Reno, Nevada. Here is a summary of the background facts:
- The lawsuit was based on Renown’s acquisition of the two largest cardiology practices in Reno, which gave the hospital 88% of the cardiology market.
- Renown required the cardiologists to sign non-compete agreements to prevent them from joining medical practices that competed with Renown.
- As a result of the acquisitions and non-compete provisions, Renown allegedly employs 88% of cardiologists in the Reno area.
- The antitrust agencies challenged Renown’s acquisitions and non-compete requirements on the basis they decreased competition and could raise prices for cardiology services.
The FTC consent degree requires Renown to suspend the non-compete provisions for 30 days while the consent decree is open for public comment. During the suspension, up to 10 cardiologists will be able to terminate their employment with Renown without breaching the non-compete provisions or incurring any other penalty. If the FTC approves the consent decree, the non-compete provisions will be suspended for an additional 30-day period. The suspensions will continue to be extended until six cardiologists have terminated their employment. In addition, the settlement requires Renown to provide notice of future cardiology-related acquisitions, implement an antitrust compliance program, and reimburse the attorney general’s fees and costs from the investigation.
Our Insight. Your Advantage. The Renown lawsuit is just the latest in the recent trend of enforcement actions brought against healthcare providers by federal regulators. The Renown matter is significant in that it signals regulators’ willingness to challenge physician practice acquisitions in addition to more commonly reviewed hospital mergers. In this regulatory climate, the antitrust implications of any type of provider consolidation should carefully be reviewed in advance of the transaction.