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AG's office clarifies position on joining merger complaint

ALBANY, Ga. -- While the Hospital Authority of Albany-Dougherty County's $195 million bid to acquire Palmyra Medical Center has drawn scrutiny and an injunction request from the Federal Trade Commission and the Georgia Attorney General's Office, a similar acquisition in Lowndes County has barely caused a ripple.

Earlier this month, Lowndes County's hospital authority, which owns South Georgia Medical Center, announced that it will take over its in-county competitor, Smith-Northview Hospital, for $40 million and the assumption of some existing debt.

Smith-Northview is a 45-bed facility with more than 600 employees. SGMC is a 335-bed hospital with more than 3,200 on staff.

That has led to questions as to why Attorney General Sam Olens' office joined in the FTC's complaint against the Dougherty County hospital authority, but has taken no action in the Valdosta acquisition. The Dougherty authority contacts with Phoebe Putney Memorial Hospital Inc. to operate its publicly owned facilities and plans to have Phoebe operate Palmyra Medical Center as Phoebe North if the sale goes through.

Currently, the Phoebe-Palmyra merger is on hold while the FTC and Phoebe, current Palmyra owner HCA and Dougherty hospital authority officials respond to a U.S. District Court judge who has temporarily held up the purchase while he determines whether to grant a permanent injunction that would allow the FTC to bring the case before an administrative law judge in September.

"The decision to join the (Albany) complaint all revolves around the FTC," AG spokesperson Lauren Kane said. "We don't have an anti-trust group in this office, but the FTC asked us to join in this particular complaint. We don't jump into every FTC case we are requested to, but this case rises to the level of AG involvement."

Kane said Olens' office was not looking into the SMGC-Northview merger and did not expect to do so.

Asked last week why the commission hasn't taken an approach in Valdosta similar to the action it has taken in Albany, FTC officials would not address specific situations. Mitch Katz, FTC public affairs specialist, did say, however, that a $40 million hospital purchase fell below the $63 million threshold that required per-merger notification to the FTC.

"So this (Valdosta) merger would appear to be a non-reportable transaction," he said last week. "We won't get involved unless somebody files a complaint."

Katz also said it is not unusual for the commission to request the involvement of the state attorney general's office.

Katz cited two requests for state attorney general office involvement:

-- In January, the FTC challenged ProMedica Health System Inc.'s consummated acquisition of rival St. Luke's Hospital in Lucas County, Ohio. The FTC's administrative complaint charges that the deal will reduce competition and allow ProMedica to raise prices for general acute-care and inpatient obstetrical services, significantly harming patients and local employers and employees.

-- In May 2008, the FTC approved a complaint challenging the proposed acquisition by Inova Health System Foundation (Inova) of Prince William Health System Inc. (PWHS) and authorized the staff to seek a temporary restraining order and preliminary injunction in federal district court to block the deal pending a full administrative trial on the merits. The action in federal district court was brought jointly with the Attorney General of the Commonwealth of Virginia.