Federal judge says LCMC Health does not need FTC permission to acquire Tulane hospitals

by John R. Fischer, Senior Reporter | October 02, 2023
Business Affairs
A federal judge has ruled that LCMC Health did not need permission from the FTC to purchase three Tulane hospitals. (Photo courtesy of LCMC Health)
In a win for LCMC Health in New Orleans, a federal judge has ruled in its favor against the Federal Trade Commission, saying that the healthcare system did not need the agency's approval to move forward with its $150 million acquisition of three Tulane hospitals.

LCMC finalized the purchase in January for Tulane Medical Center, Tulane Lakeside Hospital in Metairie, and Lakeview Regional Hospital in Mandeville from Hospital Corporation of America. By state law, it submitted its plans for review to the office of Louisiana Attorney General Jeff Landry, reported NOLA.com.

In April, the FTC threatened the healthcare system with tens of millions in fines if it did not retroactively seek its approval,

But in the trial on September 27, U.S. District Judge Lance Africk said that the health system obtained all correct state approvals from the state’s attorney general’s office, which is responsible for regulating and issuing Certificates of Appropriateness (COPAs) for hospital consolidations, and that the FTC was not within its right to ask to review the deal.

“We went through a lengthy, thorough, good faith process and ... felt confident in continuing to move forward. This brings the level of clarity that demonstrates that what we were doing was correct,” LCMC CEO Greg Feirn told Nola.com.

Landry, who intervened in the case, called it a “victory not only for the rule of law but also for increased access to quality healthcare in a community with so many underserved minorities.”

As part of its acquisition, LCMC plans to tear down and repurpose the building for Tulane Medical Center downtown into a mixed-use facility with a free-standing ER, training programs, and student housing. It also will relocate 500 doctors and medical residents from the Tulane hospitals to LCMC’s East Jefferson General in Metairie and University Medical Center.

The FTC declined Nola.com’s request for comment and did not say if it would appeal the ruling to the U.S. Fifth Circuit Court of Appeals. But its attempt to obtain the right to approve the deal highlights the escalating scrutiny and crackdowns that regulators are exercising on large mergers and acquisitions, which they say reduces competition and drives up costs.

Louisiana is one of 29 states that allow state regulators to approve hospital consolidations with COPAs, according to Nola.com. The FTC and other regulators say COPAs do not go far enough in ensuring that deals do not harm competitors or unfairly affect patients care-wise and financially.

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