California Attorney General Rob Bonta and the Federal Trade Commission have filed an antitrust lawsuit challenging John Muir Health’s acquisition of controlling interest in San Ramon Regional Medical Center.
The suit, filed Friday in U.S. District Court for the Northern District of California, seeks to block John Muir Health from acquiring Tenet Healthcare Corp., which holds controlling interest in the Contra Costa County medical center.
John Muir currently owns 49 percent of San Ramon Regional Medical Center, a 123-bed general acute care hospital, through a joint venture. Tenet holds a 51% majority.
John Muir announced a definitive agreement with Tenet in January to acquire sole ownership for $142.5 million.
The California Department of Justice and the FTC argue that the deal is inherently anticompetitive and violates the Clayton Antitrust Act, which prohibits mergers and acquisitions that would result in less market competition.
The complaint argues that the acquisition would lead to higher costs for patients, employers and insurers by eliminating competition between the medical center and John Muir’s nearby hospitals, Walnut Creek Medical Center, with 540 beds, and Concord Medical Center, with 244 beds.
“When healthcare markets illegally consolidate, patients pay the price,” Bonta said in a statement. “Competitive markets help keep prices lower. We will continue to fight to ensure that Bay Area residents – and all Californians – can access the affordable healthcare they need.”
The attorney general said a 2020 RAND study found Walnut Creek Medical Center was the costliest hospital in the U.S. from 2016 through 2018.
UPDATE: John Muir released the following statement:
John Muir Health Assessing Options After Federal Trade Commission Challenges Acquisition of San Ramon Regional Medical Center
On Friday, John Muir Health (JMH) and Tenet Healthcare learned that the Federal Trade Commission (FTC) has decided to challenge JMH’s agreement with Tenet to acquire sole ownership of San Ramon Regional Medical Center (SRRMC). JMH has owned a 49% interest in SRRMC since 2013 and, under the proposed agreement, would acquire the remaining 51% interest from Tenet.
“We are disappointed by the FTC’s decision, and are discussing our options and next steps, including challenging the decision in court,” said Mike Thomas, president and CEO of John Muir Health. “We believe the proposed acquisition would benefit our community, caregivers and patients, as well as John Muir Health, San Ramon Regional Medical Center, and Pleasanton Diagnostic Imaging.”
For now, SRRMC will continue to operate under the current joint venture structure between JMH and Tenet with Tenet managing the operations of the hospital. Pleasanton Diagnostic Imaging (PDI), which is also part of the proposed agreement, will remain operated by United Surgical Partners International (USPI).
After announcing the agreement in January, JMH and Tenet learned in late March that the FTC intended to conduct a more in-depth review of the transaction. As part of the FTC’s review process, JMH and Tenet submitted a large volume of documents and data, as well as expert testimony on the Bay Area health care market and letters of support from local community leaders and government officials.
By acquiring SRRMC and PDI, JMH would be able to further enhance care for the community by:
- Integrating SRRMC and PDI onto JMH’s version of Epic, the electronic health record used in the health system’s inpatient and outpatient facilities and by nearly 1,000 physicians and healthcare providers throughout the community.
- Extending JMH’s quality enhancement and population health programs to SRRMC and the surrounding community.
- Making investments in facilities and enhanced services at SRRMC to reduce the number of patients leaving the community for their care.
Acquiring SRRMC is consistent with JMH’s history and would further the health system’s mission to improve the health of the communities it serves with quality and compassion. In 1997, John Muir Medical Center and Mt. Diablo Medical Center came together along with the John Muir Physician Network to create John Muir Health to better serve the community.
“We appreciate the patience of John Muir Health, San Ramon Regional Medical Center and Pleasanton Diagnostic Imaging-affiliated employees and physicians throughout this process,” continued Thomas. “Once we determine our course of action, we will communicate with all impacted audiences.”