The Federal Trade Commission wants officials to block the proposed merger by Mountain States Health Alliance and the Wellmont Health System.
At a public hearing this week, Mark Seidman, deputy assistant director for the Mergers IV Division at the FTC, said the merger would substantially lessen competition, adding that the agency's investigation led to "significant concerns" about the potential negative effects on hospital pricing and quality of care, particularly for residents of southwest Virginia. Together, he said, the hospitals would have a dominant market share of inpatient services in a 21-county area.
The FTC first expressed its opposition in a report filed Sept. 30.
Mountain States, located in Tennessee, operates 13 hospitals in Tennessee, Kentucky, Virginia and North Carolina. Wellmont is a six-hospital system serving Tennessee and Virginia.
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The two systems announced the proposed merger in April 2015, saying the alliance would lower costs and better care.
"This will be an opportunity for our two organizations to come together and build something brand new that reflects what our community really needs," the announcement read.
But Seidman, speaking on behalf of FTC staff, said price hikes for healthcare services result when a merger reduces competition.
"Public and private employers, as well as patients, pay for these price increases in the form of higher premiums, higher co-pays, higher deductibles, and reduced insurance coverage," he said.
For their part, the hospitals have proposed measures they claim would mitigate any anticompetitive effects. Yet the FTC remains unconvinced, describing those measures as ambiguous, and leaving the door open for the hospitals to obtain higher prices from health insurers.
Seidman argued that the merger is unnecessary, as the two systems could achieve their desired outcomes on their own. The FTC report filed Sept. 30 claims the systems would control 71 percent of the geographic area they serve.
Mountain States and Wellmont will submit a written response to the FTC's opinion to the Southwest Virginia Health Authority by Oct. 10. Meanwhile, they have submitted reports to Virginia and Tennessee agencies as part of the regulatory approval process. In January, they pledged as much as $450 million in community benefits if the merger goes through.
Twitter: @JELagasse