The Federal Trade Commission has broken months of relative silence on hospital mergers by issuing a pointed statement targeting deals involving financially distressed health systems.
FTC Chairman Andrew Ferguson, joined by Commissioner Mark Meador, released a statement focused on Fairfield Medical Center’s sale to Adena Health in Ohio.
The statement sends a clear message to the healthcare industry that financial hardship does not exempt hospital transactions from full antitrust review.
Fairfield Medical Center, a hospital system based in southeastern Ohio, had initially considered selling to OhioHealth, a 16-hospital health system, before regulators intervened.
The FTC determined that an OhioHealth acquisition would have given the system a high share of inpatient hospital admissions, threatening to substantially reduce competition in and around Fairfield County.
Following engagement with the FTC, Fairfield Medical Center opted instead to sell to Adena Health, a transaction the commission found did not raise the same competition concerns.
The FTC made clear that financial struggles do not create a “blank check for mergers that would substantially reduce competition,” directly addressing attempts to invoke the failing firm defence.
The commission stated that an adequate shop process is a “necessary condition” to raising a failing firm defence, and that anticompetitive acquisitions will only be permitted if no alternative transaction exists that would better preserve competition.
Regulators will examine whether a distressed hospital solicited interest from the full set of potential buyers, gave them sufficient time to evaluate the deal, and provided equal access to necessary information.
The FTC will also assess whether the seller engaged with interested buyers in good faith and whether it appropriately considered offers from buyers that did not present competitive concerns.
Critically, the statement warns that if presented with an inadequate shop process, the FTC may demand that the selling firm “re-shop itself” using a sufficient process, raising the stakes for future deals.
The statement emphasises the importance of documentary evidence, stressing that distressed hospitals should carefully record each step of the shop process to withstand regulatory scrutiny.
FTC Bureau of Competition Director Daniel Guarnera referenced the agency’s commitment to preventing antitrust harm when “reviewing deals involving hospitals that serve rural communities,” signalling a particular enforcement focus.
This reflects prior statements by Chairman Ferguson, including letters to health systems about non-competes, reinforcing that rural healthcare markets remain a priority target for antitrust enforcement.
The statement also extensively praised the Ohio Attorney General’s Office for its collaboration on the matter, underlining the growing role of state-level antitrust enforcers in healthcare industry oversight.
OhioHealth separately faced scrutiny this year after the Department of Justice sued the system and reached a settlement related to allegedly anticompetitive contracting practices.
For hospital executives and advisers, the FTC’s message is unambiguous: thorough documentation and a genuinely competitive sale process are now essential safeguards for any distressed health system seeking regulatory clearance.