The Federal Trade Commission is suing in federal court to prevent John Muir Health from acquiring sole ownership of San Ramon Regional Medical Center, LLC from majority owner Tenet Healthcare Corporation. The FTC alleges the proposed $142.5 million deal would eliminate competition between the two, leading to a rise in healthcare costs for consumers.
The FTC's opposition to this acquisition is primarily based on concerns about market domination. According to a press release, the FTC claims that the deal would give John Muir, headquartered in Walnut Creek, more than half of the market for inpatient general acute care (GAC) services provided to commercial insurers and their enrollees in the I-680 corridor, which runs through California’s Contra Costa and Alameda counties. GAC services include essential medical, surgical and diagnostic services that require an overnight hospital stay.
This increased market share could potentially allow John Muir to manipulate prices at both facilities. According to a press release, with such a command of the market, John Muir could demand higher rates at both hospitals. Also, the FTC alleges that the deal could reduce incentive to improve quality of care for patients.
The FTC's Bureau of Competition Director elaborated on these concerns further. "San Ramon Regional Medical Center has played an important role in ensuring Californians in the I-680 corridor have access to quality, affordable care for critical health care services, such as cardiac surgery and childbirth," said Henry Liu, director of the FTC’s Bureau of Competition.
Liu continued by emphasizing potential adverse outcomes for patient care if this acquisition goes through. "John Muir’s acquisition of San Ramon Medical would increase already high health care costs in the area and threaten to stall quality improvements that help advance care for all patients," Liu said.
The proposed acquisition is notable because of the current stakeholder composition of San Ramon Medical. According to the release, John Muir, a non-profit, owns a 49% non-operating interest in San Ramon Medical, while Tenet, based in Dallas, holds a 51% interest.
This legal action isn't being taken on solely by the FTC. The FTC has been cooperating with the California Attorney General’s office on this case. The complaint will be jointly filed in federal district court.
