The Federal Trade Commission has ratcheted up anti-competitive claims in its opposition to Novant Health’s plan to pay $320 million in cash to reacquire two Iredell County community hospitals.
Novant signed an agreement in February 2023 to purchase Lake Norman Regional and Davis regional medical centers from subsidiaries of for-profit Community Health Systems. Novant co-owned both hospitals for an 18-month period in the early 2000s.
On Monday, the FTC filed a partially redacted memorandum in support of its preliminary injunction request, saying the proposed acquisitions “would irreversibly consolidate the market for hospital services in the eastern Lake Norman area.
Lake Norman, with 123 beds, provides emergency room, obstetrics, surgical services and outpatient tests and procedures for the Statesville market.
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Davis ceased operating as a full-service hospital in 2022 and is being converted into a behavioral health inpatient center.
In January, the FTC voted 3-0 to approve filing a complaint against Novant in the federal Western District of N.C., saying the acquisitions have the potential to limit competition in that marketplace.
Novant said in a statement it plans to continue its purchase of both hospitals, in part to bring “long-term stability to Lake Norman and Davis Regional medical centers. We will pursue available legal responses to the FTC’s flawed position.”
Novant said in a March court filing that “history shows there is virtually no scenario in which the merits of this transaction will ever be tried in the administrative proceeding, nor these defenses heard in that forum.”
Novant owns and operates Huntersville Medical Center, a 151-bed facility 11 miles from Lake Norman Regional. According to the FTC filing, the Huntersville hospital “competes aggressively against each other to gain market share.”
The FTC said that if the sale is permitted, Novant would control “an eye-popping” 64% of inpatient acute-care services market for the Lake Norman and northern Mecklenburg County area.
If the Novant purchase gains approval, competing hospitals would be Iredell Memorial Hospital and a planned 30-bed acute-care Atrium Health hospital in Cornelius that’s projected to open in mid-2025.
In the filing, the agency said that “Novant now seeks to acquire one of its closest competitors in the area, threatening this vibrant community and exposing North Carolinians to increased costs and limited healthcare options.”
The FTC also claims the deal would also reduce Novant’s incentive to compete to attract patients by improving its facilities, service offerings and quality of care.”
“Hospital consolidations often lead to worse outcomes for nurses and doctors, result in higher prices, and can have life and death consequences for patients,” said Henry Liu, director of the FTC’s Bureau of Competition. “There is overwhelming evidence that Novant’s deal with Community Health Systems will be detrimental to patients in the eastern Lake Norman area, including leading to higher out-of-pocket costs for critical health care services.”
When Novant announced its plans for the purchases, chief executive Carl Armato said that “this unique and exciting opportunity to extend Novant Health’s regional delivery network to new communities also creates opportunities for medical education, research and innovation.”
Matthew Littlejohn, chief executive of both Iredell hospitals, said Novant was the right choice for the new owner because it “has a demonstrated commitment to delivering quality care to the patients they serve across the communities they serve.”
