FTC calls for review of UPMC-WHS proposed merger over potential anticompetitive concerns
por John R. Fischer, Senior Reporter | January 15, 2024
Business Affairs
UPMC Presbyterian (Photo courtesy of UPMC)
The Federal Trade Commission has launched a review of the recently announced merger between the University of Pittsburgh Medical Center and Washington Health Services, in Pennsylvania, considering whether or not the impact it would have on competition in the area would pose more harm than good.
In talks since June 2023, UPMC and WHS announced the deal in October, with WHS agreeing to rebrand as UPMC Washington once the merger was completed and bringing its flagship 279-bed provider The Washington Hospital as well as its 49-licensed-bed WHS-Greene Hospital in Waynesburg under UPMC control. Additionally, it would include WHS’ more than 40 off-site locations, diagnostic centers, outpatient care facilities, Wilfred R. Cameron Wellness Center, and hospice care facilities.
While not obligated, the FTC can choose to become involved in healthcare deals once its reviewed them. Its decision to review the UPMC-WHS proposed agreement is one of many it has undertaken in the last few years under President Biden, who has vowed to crack down on large-scale mergers and acquisitions, which critics say limit competition and available options for patients, and risk allowing merged entities to raise their prices.
UPMC is already the biggest nongovernmental employer in the state, controlling 43% of the inpatient market for medical-surgical services in the 29 counties of Western Pennsylvania, including Washington County. This includes ownership of more than 20 outpatient and surgical centers in the region, reported the Pittsburgh Post-Gazette.
If approved, the merger would leave ACMH Hospital in East Franklin and St. Clair Hospital in Mt. Lebanon as the only independent health systems in the Pittsburgh area, an outcome that has led area unions, including SEIU Healthcare Pennsylvania, which represents healthcare workers, to speak out against the deal, saying it would lead to service cuts and higher costs.
Responding to the FTC review announcement, UPMC told HCB News that it is “working to complete the affiliation as soon as possible” and that “it would allow WHS to preserve and enhance high-quality healthcare services for communities it serves.”
As part of its review, which includes the state attorney general, the FTC has reached out to competitors in the area, including Allegheny Health Network, Penn Highlands Healthcare, and other medical centers, to ask for comments on the UPMC-WHS proposal. Under its new guidelines, the agency says that deals that give a merged company more than 30% market share are harmful to competition.
According to Beth Vessel, a partner at the Miami-based law firm of Holland & Knight LLP who is not involved in the UPMC-WHS talks, FTC involvement would likely delay regulators’ final decision on whether to approve the merger.
“Thirty percent is pretty small,” she said. “It just means more transactions will be challenged as potentially anticompetitive.”
Financial details for the agreement have not been disclosed.
The FTC, the state attorney general, and WHS declined the Pittsburgh Post-Gazette’s request for comment.
In talks since June 2023, UPMC and WHS announced the deal in October, with WHS agreeing to rebrand as UPMC Washington once the merger was completed and bringing its flagship 279-bed provider The Washington Hospital as well as its 49-licensed-bed WHS-Greene Hospital in Waynesburg under UPMC control. Additionally, it would include WHS’ more than 40 off-site locations, diagnostic centers, outpatient care facilities, Wilfred R. Cameron Wellness Center, and hospice care facilities.
While not obligated, the FTC can choose to become involved in healthcare deals once its reviewed them. Its decision to review the UPMC-WHS proposed agreement is one of many it has undertaken in the last few years under President Biden, who has vowed to crack down on large-scale mergers and acquisitions, which critics say limit competition and available options for patients, and risk allowing merged entities to raise their prices.
UPMC is already the biggest nongovernmental employer in the state, controlling 43% of the inpatient market for medical-surgical services in the 29 counties of Western Pennsylvania, including Washington County. This includes ownership of more than 20 outpatient and surgical centers in the region, reported the Pittsburgh Post-Gazette.
If approved, the merger would leave ACMH Hospital in East Franklin and St. Clair Hospital in Mt. Lebanon as the only independent health systems in the Pittsburgh area, an outcome that has led area unions, including SEIU Healthcare Pennsylvania, which represents healthcare workers, to speak out against the deal, saying it would lead to service cuts and higher costs.
Responding to the FTC review announcement, UPMC told HCB News that it is “working to complete the affiliation as soon as possible” and that “it would allow WHS to preserve and enhance high-quality healthcare services for communities it serves.”
As part of its review, which includes the state attorney general, the FTC has reached out to competitors in the area, including Allegheny Health Network, Penn Highlands Healthcare, and other medical centers, to ask for comments on the UPMC-WHS proposal. Under its new guidelines, the agency says that deals that give a merged company more than 30% market share are harmful to competition.
According to Beth Vessel, a partner at the Miami-based law firm of Holland & Knight LLP who is not involved in the UPMC-WHS talks, FTC involvement would likely delay regulators’ final decision on whether to approve the merger.
“Thirty percent is pretty small,” she said. “It just means more transactions will be challenged as potentially anticompetitive.”
Financial details for the agreement have not been disclosed.
The FTC, the state attorney general, and WHS declined the Pittsburgh Post-Gazette’s request for comment.
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