FTC seeks guidance from Georgia agency on Albany hospital purchase

An agreement between the FTC, the Hospital Authority of Albany-Dougherty County and Phoebe Putney has not been finalized

ATLANTA — The Federal Trade Commission is asking a state agency to determine whether a potential divestiture of the Albany hospital that Phoebe Putney acquired in 2011 would require certificate-of-need regulatory approval.

Last August, the FTC and Phoebe Putney Health System announced they were settling the agency’s long-running antitrust suit over the hospital acquisition, and that the deal would allow Phoebe to keep control of the former Palmyra Medical Center, which was purchased for $195 million by the Hospital Authority of Albany-Dougherty County and renamed Phoebe North.

But that deal has not yet been finalized. And the FTC, in a letter Monday to the Georgia Department of Community Health, indicated that the legal opinion by state officials may make a difference in whether it goes through with the settlement.

The letter noted that the FTC gave preliminary agreement to the settlement based on its understanding that the state’s certificate-of-need (CON) laws — which limit the number of health care facilities in the state — would prevent a breakup of the merged hospitals.

But now the possibility of undoing the merger appears to be more than hypothetical. A potential buyer for the former Palmyra has come forward, the FTC letter said.

“FTC staff recently learned that North Albany [Medical Center] is interested in acquiring the former Palmyra assets,’’ said the letter from the commission’s director of the Bureau of Competition, Deborah Feinstein.

An attorney for the North Albany group, Victor Moldovan, told GHN on Tuesday that “it’s our position that the FTC can order divestiture and that CON would not be an obstacle.’’

Moldovan, in a March letter to state officials, noted that Community Health agreed in 2012 that South Georgia Medical Center in Valdosta could decouple and sell a psychiatric hospital without a CON review.

North Albany, he said, “would be very interested’’ in acquiring the former Palmyra assets, now known as Phoebe North.

The FTC, through a spokesman, declined to comment Tuesday on the letter to Community Health.

A spokeswoman for Community Health said Tuesday that the agency had received an emailed copy of the FTC letter. The agency declined comment whether it had made any determination on the Albany CON issue, or whether there was any precedent established in a previous hospital decision.

A Phoebe Putney Health System spokeswoman Tuesday referred GHN to a recent statement by Vice President and General Counsel Thomas Chambless, which said that “the matter was resolved appropriately last August based on standing law and precedent, which the Federal Trade Commission recognized in its analysis at the time.”

“We anticipate a final order consistent with the earlier order,’’ the statement added.

The FTC has been given until April 14 by the U.S. District Court to decide what to do in its litigation against Phoebe and the Hospital Authority.

Albany Herald reports contributed to this report.