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Crain’s Detroit: Regulators reviewing Spectrum, Beaumont merger ahead of fall closing COURTESY PHOTOS

Crain’s Detroit: Regulators reviewing Spectrum, Beaumont merger ahead of fall closing

BY DUSTIN WALSH Monday, August 30, 2021 02:10pm

Editor’s note: This story is being republished with permission from Crain’s Detroit Business.

The U.S. Federal Trade Commission is in the middle of its antitrust review of the proposed merger between Beaumont Health and Spectrum Health.

Lawyers from the FTC have spent the past few weeks meeting with large employers and other stakeholders who may have reason to oppose the merger, Crain’s learned from a source familiar with the review who requested anonymity. The FTC would not comment on the matter.

Crain’s reached out to several large employers, including General Motors and Ford Motor Co., to discuss whether executives had met with the FTC, but all declined comment.

“GM understands the FTC's review of the proposed merger is considered confidential and, therefore, we are not able to comment,” Maria Raynal, executive communications manager for GM, said in an email.

After a merger is proposed, the merging parties submit documents to the FTC for preliminary review where the agency can rule the deal can move forward or initiate a deeper review, called a “second request,” that seeks more information from the parties and from outside stakeholders.

The FTC’s review of the Beaumont, Spectrum merger is likely in the “second request” phase. However, the review does not indicate whether the FTC may take any action to halt or modify the merger.

The FTC is seeking to determine whether the proposed deal — which creates the state’s largest employer and health care system with a $12 billion, 22 hospital system that employs 64,000 — reduces health care competition locally.

There is evidence that mergers between in-state providers do raise prices, and inpatient and outpatient services for Grand Rapids-based Spectrum are notably more expensive than Beaumont, Crain’s previously reported. And in July, President Joe Biden signed a sweeping executive order that pressed the FTC and U.S. Department of Justice to review and revise guidelines for hospital mergers that can lead to higher prices.

But whether that alone constitutes anti-competitive behavior is up for debate, said Mark Kopson, partner and chair of the health care practice at Plunkett Cooney PC in Bloomfield Hills.

Kopson is not involved in this merger.

“It’s going to be very difficult to argue that John Q. Public is harmed from reduced competition,” Kopson said. “You’re not eliminating hospitals. Spectrum and Beaumont don’t offer overlapping services in the same geographies.”

Spectrum contends the merger will reduce costs.

“Spectrum Health and Beaumont Health look forward to working together to make health care more accessible, equitable, affordable and exceptional for Michiganders and to improve the health of our communities,” the health system said in a statement to Crain’s. “We have submitted the necessary filings and are cooperating fully with the Federal Trade Commission in its review of this integration. We believe the combination of our organizations will be pro-competitive and will benefit patients, communities and the state of Michigan.”

Beaumont offered a similar response.

“We have filed our required submissions and are working to achieve the appropriate regulatory reviews for our proposed partnership with Spectrum Health,” the Southfield-based health system said in a statement to Crain’s. “We are continuing to have conversations with our employees, physicians and community members about this extraordinary opportunity to create a new health system that will be designed to make health care more accessible, equitable and affordable and that will benefit the citizens of the state of Michigan.”

The office of Michigan Attorney General Dana Nessel also declined to comment as the AG’s office entered into a non-disclosure agreement with the two health systems as it conducts its review of the systems’ nonprofit foundations in the merger.

The FTC review typically lasts at least 30 days and potentially longer if the agency decides to submit legal framework to disallow the merger.

The two health systems hope to close on the deal this fall, though no specific date is targeted, Beaumont said in a statement.

Kopson believes the deal will sail through the FTC review due to it not reducing hospitals in operation.

“I’ve been wrong before, but I don’t see how the FTC stops this deal,” Kopson said. “I don’t expect the merger to be challenged.”

This story originally appeared in Crain’s Detroit Business and is reprinted with permission.

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