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FTC lawsuit standing in way of Novant $320 million acquisitions in North Carolina

by John R. Fischer, Senior Reporter | January 29, 2024
Business Affairs
Lake Norman Regional Medical Center (photo courtesy of namesake)
Novant Health has become the latest target of Washington, D.C.’s antitrust scrutiny watchdog, the Federal Trade Commission, which filed a lawsuit against its $320 million acquisition of Lake Norman Regional Medical Center and Davis Regional Medical Center, a behavioral health hospital, from Community Health Systems in North Carolina.

In an administrative complaint issued alongside the lawsuit, the FTC says that acquiring both sites would provide Novant, already one of the largest health systems in the southeastern U.S., including North Carolina, with almost 65% of the market for inpatient general acute care services (GAC) in the state’s Eastern Lake Norman Area, which primarily is made up of Iredell County and northern Mecklenburg County.

Inpatient GACs include a range of required medical, surgical, and diagnostic services that require an overnight hospital stay. With a majority of the market, Novant, also one of the most expensive health systems there, would be able to charge higher rates due to less competition and refrain from investing in improvements for facilities, service offerings, and quality of care to attract patients. The alleged price hikes would amount to several millions in annual healthcare costs that would fall on patient shoulders, it says.

“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,” said Henry Liu, director of the FTC’s Bureau of Competition, in a statement.

In response, a Novant spokesperson told HCB News that the provider would "pursue available legal responses to the FTC’s flawed position" and that it was confident in its ability to provide "exceptional care, leading-edge innovation, and long-term stability to Lake Norman and Davis Regional Medical Centers for these reasons."

Novant already cares for more patients than any other provider in the Eastern Lake Norman Area, including at its Huntersville Medical Center, which is 11 miles away from Lake Norman Regional Medical Center.

In addition to that site and Davis Regional Medical Center, Novant plans to acquire a physician group of 24 doctors employed by Lake Norman Regional Medical Center; a majority interest in an endoscopy center in Mooresville; and an entity holding a North Carolina certificate of need to build an ambulatory surgery center in Mooresville.

In a 3-0 vote, the FTC opted to move forward with the administrative complaint and for staff to seek a temporary restraining order and preliminary injunction. It filed these claims in the U.S. District Court for the Western District of North Carolina, asking to put the brakes on the transaction pending an administrative proceeding.

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