FTC Sues to Block LKN Hospital Transactions

This message content was provided by Business North Carolina and written by David Mildenberg.

Novant Health’s $320 million bid to buy two Iredell County hospitals from Community Health Systems is opposed by a Federal Trade Commission lawsuit issued today.

The commission authorized the federal lawsuit, alleging the deal to buy Lake Norman Regional Medical Center in Mooresville and Davis Regional Medical Center in Statesville “threatens to raise prices and reduce incentives to invest in quality and innovative care that would benefit patients,” according to a press statement.

Novant announced the transaction in February 2023.

“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, in the release. “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.”

The FTC complaint noted that Novant is among the largest and most expensive U.S. hospital systems in North Carolina. Its Huntersville Medical Center in north Mecklenburg County already services more patients than any other Lake Norman-area hospital. The deal would provide Novant with a nearly 65% market share for inpatient general acute care services in the Iredell and north Mecklenburg area, the FTC said.

In an emailed statement, Novant said it is “committed to delivering the highest-quality, patient-centered, physician-directed care to the communities served by Lake Norman and Davis Regional Medical Centers.” The system “will pursue available legal responses to the FTC’s flawed position announced today.”

The Winston-Salem-based system competes with Atrium Health as the dominant healthcare systems in the Charlotte and Winston-Salem markets.

Local officials had generally praised the proposed acquisition, which they contend should preserve hospital services in the fast-growing Lake Norman area. Davis Regional is now a 24-bed behavioral medical center. Iredell County also has a 247-bed hospital in Statesville, Iredell Memorial Hospital, which is part of the nonprofit Iredell Health System, which is led by a board of county residents.”

Community Health Systems is a for-profit public company operating 76 hospitals. It is based in Franklin, Tenneseee. It has annual revenue topping $12 billion annually. It had a net loss of $180 million during the first three quarters of its current fiscal year, while its total debt exceeded $11.8 billion as of Sept. 30.

Under the Biden Administration, the FTC has exhibited more opposition to hospital-industry mergers than previously.

In 2021, Charlotte-based Atrium Health abandoned a planned merger of its Navicent subsidiary with Houston Healthcare System after the FTC said the deal would eliminate “intense competition between two of the largest hospital systems in the Macon-Warner Robins area of central Georgia.”