Novant Health abandons $320 million Lake Norman hospital deal plans amid FTC concerns
After a long court battle with the Federal Trade Commission, Novant Health is backing out of a $320 million deal to buy two Lake Norman hospitals, the health care giant announced Tuesday.
The surprise move also came after Novant’s latest legal defeat in the case. On Tuesday afternoon, a divided Fourth Circuit Court of Appeals granted the FTC’s request for an emergency injunction blocking the sale.
“We are steadfast in our belief that these facilities and their patients would have greatly benefited from joining Novant Health, but with the FTC’s continued roadblocks we do not see a way to finalize this transaction,” Winston-Salem-based Novant said in a statement.
The FTC had filed a lawsuit in the U.S. District Court for the Western District of North Carolina in January. Agency officials said the deal would hurt consumers by eliminating competitors and increasing insurance rates, which Novant has denied.
The FTC said in court filings that the deal was unlawful in part because “it would result in a combined entity with an eye-popping 64% share of the market in the Eastern Lake Norman Area.”
In June, a federal judge denied the FTC’s request for a preliminary injunction to stop Novant Health from buying Lake Norman Regional Medical Center in Mooresville and Davis Regional Medical Center, a behavioral health hospital in Statesville.
The judge’s order said the public interest is best served by Novant being permitted to own and operate Lake Norman and Davis Regional medical centers pending the conclusion of the FTC administrative process.
After losing a district court decision last week, the Federal Trade Commission’s battle against Novant Health shifted to U.S. Appeals Court.
“Despite our vision to restore services the area has lost and deliver high quality, remarkable care, we have been met with opposition from the Federal Trade Commission at every step,” Novant stated. “So we will look for other ways to support patients and clinicians in these communities.”
Novant said it had been working on the plans for Lake Norman for over a year.
An FTC official could not immediately be reached for comment Tuesday.
The 4th Circuit weighs in
On Tuesday, the 4th Circuit split 2-1 on the case, with judges Stephanie Thacker and DeAndrea Benjamin approving the injunction request, and Judge Harvie Wilkinson III against it.
In his dissent, Wilkinson said the district court found that the proposed transaction would revitalize the Davis hospital and improve competition between Novant and Atrium, its main competitor in the Charlotte region.
“The Davis hospital seems on its last legs, and I worry that, as the district court found, its closure may be imminent,” he wrote. Wilkinson added he was concerned that an injunction would sink the hospital and bring “detrimental anti-competitive effects” to the Charlotte community.
“The FTC is acting too aggressively in this case, forgetting there is such a thing as a vibrant private sector,” he wrote.
Community Health System owns the two hospitals that Novant wanted to buy. They are the only CHS centers in North Carolina. CHS was also listed as a defendant in the case.
The Tennessee-based company did not respond to a request for comment.
FTC’s push against Novant
In its court filings, the FTC raised several concerns about the deal between Novant and Community Health Systems, Inc.:
▪ Novant’s plan is unlawful in part because it would give the combined entity a 64% share of the market in the eastern Lake Norman area.
▪ Novant continues to grow through a decades-long series of mergers. The company has worked to control six hospitals in the Carolinas within the last year, the FTC added.
▪ Novant had rounds of layoffs and cut hundreds of jobs at the company in recent years. In October, Novant announced plans to cut 160 jobs across its network.
About the hospital systems
Novant is one of the largest hospital systems in North Carolina and the Southeast, and operates more than 800 outpatient facilities and physician office in the Carolinas. Its total revenue was $7.6 billion in 2022, according to the complaint filed by the FTC.
CHS runs 71 hospitals and thousands of care sites across 15 states. Its annual revenue was $12.2 billion in 2022.
This story was originally published June 18, 2024 at 4:52 PM with the headline "Novant Health abandons $320 million Lake Norman hospital deal plans amid FTC concerns."
