North Carolina backs FTC lawsuit to block Novant Health’s hospital deal

North Carolina has backed the U.S. Federal Trade Commission’s lawsuit seeking to block Novant Health’s $320 million acquisition of two hospitals in the state, a deal the agency said would lead to higher prices and reduced innovative care.

North Carolina’s state treasurer on Monday filed a “friend of the court” brief urging, opens new tab U.S. District Judge Kenneth Bell in the Western District of North Carolina to preliminarily stop Novant from buying the hospitals from Community Health Systems.

The FTC in January sued Novant, which it said was among the largest hospital systems operating in the southeastern United States and “one of the most expensive” in North Carolina.

Bell is weighing issuing an order that could halt the proposed purchase as the FTC mounts a separate administrative challenge against the transaction, which was announced last year.

Novant in a statement on Tuesday criticized North Carolina’s brief as reflecting the “FTC’s ‘one-size-fits-all’ attack on hospital mergers.” Novant said its acquisition plan will “benefit quality of care, long-term outcomes and competition.”

North Carolina Treasurer Dale Folwell’s office did not immediately respond to a request for comment. The FTC declined to comment.

An administrative hearing before the FTC to determine the legality of the proposed transaction is scheduled for June 26.

The state treasurer’s office is a fiduciary for the state health plan, which in 2023 had $4 billion in expenditures for medical, pharmacy and other claims.

FTC Chair Lina Khan in remarks in February said a focus on healthcare markets was a key part of the Biden administration’s antitrust enforcement agenda.

Khan said her agency was “squarely focused on tackling illegal business practices that deprive Americans of access to affordable and innovative healthcare.”

Novant’s proposed acquisitions of Lake Norman Regional Medical Center and Davis Regional Medical Center would “significantly increase concentration in an already highly concentrated market,” according to the FTC.

The FTC said the alleged loss of competition in parts of North Carolina “would likely result in millions of dollars in increased healthcare costs.”

Novant Health and Community Health countered, opens new tab in a filing that the FTC’s position is “premised on a distorted and artificially narrow view of healthcare competition” in the Charlotte, North Carolina, area.

Novant said it wanted to “acquire and revitalize two struggling hospitals.”

The case is Federal Trade Commission v. Novant Health Inc and Community Health Systems Inc, U.S. District Court for the Western District of North Carolina, No. 5:24-cv-00028-KDB-SCR. Reuters