Case of FTC opposition to Phoebe North purchase pulled from administrative proceedings until March

ALBANY — Several months after a proposed settlement was rejected by the Federal Trade Commission regarding the Hospital Authority of Albany-Dougherty County’s purchase of the former Palmyra Medical Center, now Phoebe North, the case has been pulled from administrative review through the end of the month for the purpose of considering a consent proposal.

An order, issued Jan. 28, withdrew the matter from adjudication because there is the possibility of a settlement. The order stayed proceedings until 11:59 p.m. on Feb. 27 pending a determination by the FTC with respect to the consent proposal. It was further ordered that the consent proposal not be placed on public record unless and until it is accepted by the agency.

A spokeswoman from the FTC said the agency would have no comment on the matter.

Officials from Phoebe Putney Memorial Hospital also have declined to comment, a spokeswoman from the hospital said.

The case concerns the December 2010 merger that brought Palmyra, then a privately-owned rival to Phoebe, under the ownership of the Hospital Authority, raising concerns from the FTC that the $195 million purchase violated antitrust laws and greatly diminished competition in the Southwest Georgia health care marketplace.

Officials with the FTC announced in September that it — in a 3-0 vote with Commissioners Joshua D. Wright and Terrell McSweeny abstaining —was rejecting a settlement the agency developed a year earlier, placing the matter back in administrative court. The matter was due to go back into proceedings this month.

The FTC, in its 2011 complaint against the purchase of Palmyra from Hospital Corporation of America (HCA) by the Hospital Authority, argued the acquisition would reduce competition for acute-care hospital services sold to commercial health plans in the six-county area that comprises metro Albany — Dougherty, Lee, Worth, Baker, Terrell and Mitchell counties. The commission argued the lessened competition would give Phoebe, which was chosen by the Authority to operate Phoebe North, an 85 percent market share and would, the FTC contended, cause health costs to rise, harming patients and employers.

The Hospital Authority and Phoebe had argued the transaction was exempt from federal antitrust oversight under the state action doctrine, a position that was upheld in U.S. District Court and the 11th U.S. Circuit Court of Appeals, but rejected in February 2013 by the U.S. Supreme Court.

Citing Georgia’s Certificate of Need law, the FTC in August 2013 had proposed a settlement that would have allowed the Authority to retain ownership of Phoebe North and also would have allowed Phoebe Putney Memorial Hospital to operate the facility. FTC officials said the CON law made a structural remedy to the acquisition impossible. During the comment period on the proposed agreement, however, FTC officials said input from the public and “other information” led them to believe the Georgia CON law did not preclude a structural solution, resulting in the commissioners’ vote to withdraw acceptance of the proposed consent agreement and return to administrative litigation.

North Albany Medical Center LLC, which an out-of-state business that registered with the Georgia Secretary of State’s Office in December 2013, impacted the FTC’s decision to reject the settlement. In early June, the Georgia Department of Community Health staff issued an initial determination that said returning Phoebe North to its previous status as a separately licensed hospital for divestiture would not require prior review and approval by the Department of Community Hhealth, a position that Phoebe and the Hospital Authority appealed. An administrative hearing officer later reversed the finding, saying the state laws would apply in the event of a divesture.