Facing opposition, Indiana hospitals pause merger plans

Facing public concerns, two Indiana hospital systems are pausing their merger plans, with hopes of eventually still coming together.

Union Health says it is withdrawing its application to merge with Terre Haute Regional Hospital, but the system plans to file a revised application with Indiana state officials.

Union Health and Terre Haute Regional Hospital, both based in Terre Haute, have been working on a merger for more than a year. On Monday, Union Health said it is withdrawing the merger application with state officials.

Union Health said the system plans to file a revised Certificate of Public Advantage with the Indiana Department of Health in hopes of winning the approval of state officials.

“Recognizing the COPA process is a very complex, innovative approach to improving access and quality health care for area residents, we believe it is best to withdraw the current application to allow time for Union Health and Terre Haute Regional to continue to work with IDOH, to ensure the benefits, including improved access, quality, prevention and early intervention, are outlined in the new application,” Union Health said in a statement on its website.

“Union Health and Terre Haute Regional recognize the significance of a final approval, and the ongoing review process will continue to align with the principles of accountability and thoroughness as outlined by the COPA,” Union Health said.

In first announcing its plans in September 2023, Union Health said it would acquire Terre Haute Regional. Officials said the deal would allow the merged organization to invest more in efforts to improve healthcare in the community.

But critics have said the deal isn’t in the best interest of the region. The two hospitals are the only two acute care facilities in the Terre Haute area, and opponents of the deal fear that it would raise prices for healthcare services and could lead to job reductions.

In September, the Federal Trade Commission filed objections with the planned merger, saying it could reduce competition and eventually result in higher prices for consumers.

Zack Cooper, an associate professor at Yale University who has spoken out against the planned merger, told Chief Healthcare Executive® last week that the deal would lead to higher prices and could reduce the quality of care.

“What we care about here is the reduction in competition,” Cooper said. “These are two competing hospitals in a fairly close geographic area. It would form a monopoly for local care. It would be the largest employer in the area. It's going to clearly benefit the merging hospitals. It's not going to benefit the local community.”

Steve Holman, the CEO of Union Health, wrote in an op-ed in the Indianapolis Star that the merger with Terre Haute would be best for the region.

“The merger is not merely a business transaction; it is a strategic effort to improve healthcare delivery in our community,” Holman wrote. “By combining resources and expertise, Union Health and Regional Hospital aim to expand services, enhance the quality of care, and ultimately improve health outcomes while maintaining cost efficiency for consumers.”

In its statement announcing that it is withdrawing its application, Union Health pointed to its 130-year history and said it remains committed to developing “innovative solutions to overcome the persistent health disparities and challenges plaguing our communities for decades.”

“We look forward to continuing to collaborate with community partners to improve the health and wellness of the areas we serve and creating a significant impact on community health. We are optimistic about the future of health care in our community,” Union Health said.

Terre Haute, a 278-bed hospital, is owned by HCA Healthcare, the nation’s largest for-profit hospital system. Union Health, a nonprofit system, operates its main hospital in Terre Haute, as well as a critical access hospital in Clinton, Indiana.

Union Health said the system had no additional comments beyond its news release. A Terre Haute Regional spokesperson referred to Union Health’s statement.

The FTC unanimously voted, 5-0, to send notice of its objections to Indiana state officials in September. The commission submitted a 107-page comment to the Indiana Department of Health, raising concerns of higher costs and reduced quality of care.

The FTC also voiced concerns about the plans for the two hospitals to come together under a certificate of public advantage. Regulators contend that such certification doesn’t allow for sufficient scrutiny, and the FTC has raised objections to other mergers and acquisitions under such certificates in other states.

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