Proposed California Hospital Merger Collapses After FTC Files Lawsuit 

By Consumers for Quality Care, on January 24, 2024

Proposed California Hospital Merger Collapses After FTC Files Lawsuit 

John Muir Health, a nonprofit hospital in California’s Bay Area, inked an agreement early last year to become the sole owner of San Ramon Regional Medical Center, a lower cost competitor. Had the deal gone through, John Muir would have controlled more than 50% of inpatient general acute care services in the area. This would have dramatically reduced competition, increasing the combined system’s market power, leading ultimately to higher prices for local patients and health care consumers.  

For this reason, the Federal Trade Commission (FTC) decided to step in, filing a lawsuit late last year to stop the proposed merger. Lawsuits to stop anticompetitive mergers are becoming a go-to tactic for the Biden administration, which is increasingly outspoken in its criticism of these transactions. Top White House officials have argued that consolidation in the health care industry is leaving consumers worse off. That position has support from the latest research in health care economics. For example, a new study by University of Pennsylvania Medical Professor Dr. Rachel Werner shows that health care prices increase when hospitals merge and that the increases come with no corresponding improvements in the quality of service rendered to the patient. 

Thankfully, the FTC’s lawsuit against John Muir Health and Tenet Healthcare (San Ramon’s owner) has proved successful. Days after the lawsuit was filed, the two health systems announced that they would indeed cancel the deal, according to Healthcare Dive

In a statement, the FTC claimed victory, calling it “another major health care win.” Decreased competition hurts consumers, often leading to fewer options for care and higher out-of-pocket costs. CQC urges regulators and lawmakers to scrutinize hospital mergers and to do everything within their power to ensure that consumers don’t foot the bill for anti-competitive practices.