LCMC Health, feds battle over acquisition of 3 HCA hospitals

LCMC Health is embroiled in a legal battle with federal regulators over its purchase of three Louisiana hospitals from HCA Healthcare.

Louisiana state officials had approved LCMC Health’s acquisitions of the hospitals. But the Federal Trade Commission said last week it was seeking court approval to block LCMC from integrating the hospitals into the system until federal regulators could review the transaction.

Louisiana Attorney General Jeff Landry (Louisiana Dept. of Justice)

Conversely, LCMC Health has also filed a suit against the FTC and the U.S. Justice Department, arguing that federal officials shouldn’t be intervening since Louisiana officials had signed off on the deal. Jeff Landry, Louisiana's attorney general, also criticized the actions of federal officials and has vowed to fight back.

Here’s a closer look at the clash that has now moved to the courts.

The deal

In October, LCMC Health announced it had reached a deal with HCA Healthcare to buy three hospitals in a $150 million deal. Under the agreement, LCMC acquires Tulane Medical Center, Lakeview Regional Medical Center, and Tulane Lakeside Hospital.

With the deal, LCMC Health, a non-profit system, would operate nine hospitals in the New Orleans region. Ochsner Health is the other main provider in the region.

Last fall, LCMC Health and Tulane University also announced plans to expand healthcare options and medical training for doctors and nurses in the region. LCMC Health said it would invest $220 million into upgrades for East Jefferson General Hospital, Lakeview Regional Medical Center, and Tulane Lakeside Hospital.

LCMC Health said it planned to shift most services from Tulane Medical Center to nearby East Jefferson General Hospital and University Medical Center New Orleans over the next 12-24 months. Officials said the Tulane Medical Center would be repurposed and house a nursing program, research programs and educational space.

In January, LCMC Health and Tulane announced they finalized the partnership after the Louisiana Department of Justice approved the deal.

“The shared vision between LCMC Health and Tulane University to provide unparalleled patient care and medical research advancements in Southeast Louisiana made this partnership a natural fit,” LCMC Health CEO Greg Feirn said in a January statement.

Federal opposition

The FTC has applied more scrutiny to hospital mergers and acquisitions, particularly deals that involve organizations in the same regions.

• Read more: These planned hospital mergers collapsed. Here’s why.

Last week, the FTC said it had filed a petition for a temporary restraining order and a preliminary injunction to keep the three hospitals separate from the rest of the LCMC Health system. The commission says federal regulators must review the transaction, and that LCMC Health acted improperly in closing the deal without notifying federal agencies.

"We are seeking to hold LCMC accountable for disregarding the law by ignoring filing requirements and prematurely consummating their deal,” FTC Chair Lina M. Khan said in a statement. “Businesses that believe they can flout the law should be on notice: we will use the full scope of our authority to combat obstruction and to vindicate the FTC’s authority to investigate potentially illegal deals.”

LCMC Health and HCA Healthcare argued they could move forward after the state of Louisiana granted approval under a Certificate of Public Advantage. Federal officials say that state certification can’t be used to skirt federal requirements for regulatory review of such mergers.

The FTC has moved to block some hospital mergers, saying they would reduce competition and could force consumers to pay higher costs while getting fewer services.

National Nurses United has criticized the deal, saying that with just two health systems dominating the New Orleans market, healthcare costs would likely increase.

Fighting the FTC

LCMC Health filed suit last week to block the FTC and the Justice Department from interfering in the merger.

The health system, which also names U.S. Attorney General Merrick Garland, says federal agencies have no business interfering since Louisiana state officials already approved the transaction, WVUE-TV reported.

In a statement sent to Chief Healthcare Executive®, LCMC Health said the state certification process was “rigorous and transparent.”

“We are on solid ground and Louisiana knows what is best for our community,” LCMC Health said in the statement. “We are steadfast in our commitment to delivering health, care, and education beyond extraordinary for all, and continuing to deliver the benefits of the partnership for our patients and community.”

Louisiana Attorney General Jeff Landry also has denounced federal officials for moving to halt the transaction. Landry also said in a statement that Louisiana would take action against federal officials. He also questioned why federal officials are acting more than three months after state certification was given.

“I will explore all of our State’s legal options to fight this federal overreach,” Landry said in the statement.

In addition, Landry also said the deal would serve the healthcare needs of the New Orleans region. He said in his statement the merger would “lead to greater access to health care, result in higher quality health care, and will likely not result in undue increases to costs.”

In addition, U.S. District Judge Amy Berman Jackson has issued a ruling barring LCMC Health from closing any of the hospitals it acquired from HCA Healthcare, nola.com reported Monday.