FTC nixed cardiology deal, sources say
Providence Health Care’s plan to buy two large cardiology practices in Spokane may have been abandoned in the wake of a ruling by federal antitrust regulators.
The Federal Trade Commission began reviewing Providence’s proposed purchase of Spokane Cardiology and Heart Clinics Northwest last year. While the clinics and Providence – which operates Providence Sacred Heart Medical Center – envisioned closing the deal last fall, the subsequent FTC review altered those plans.
Providence spokesman Joe Robb declined to answer questions regarding the FTC ruling. Providence also declined a request to release documentation related to the FTC’s review. Robb said, however, that Providence still plans to create its Providence Spokane Heart Institute within the Sacred Heart campus.
Although several sources with knowledge of the negotiations indicated that the FTC rejected the proposal, the federal agency hasn’t decided whether to publicly release its ruling on the Providence case, said Leonard Gordon, director of the FTC’s Northeast Region in New York City. Many FTC actions involving privately held companies such as the cardiology practices in Spokane and nonprofit entities such as Providence are kept confidential, he said.
Robb, the Providence spokesman, also declined to comment on whether the hospital and the cardiology clinics are renegotiating to salvage some sort of alliance.
Administrators of the two cardiology practices could not be reached for comment.
The financial terms of the original deal were never released. When it was announced last July, Providence Spokane CEO Andrew Agwunobi characterized the cost as significant but an important step in Providence’s plans to build a major center for patients seeking heart care.
The deal would have brought every independent cardiology practice in Spokane under the ownership of one of Spokane County’s two hospital systems.
Cardiology practices are joining with hospitals across the nation as physicians swap their private practices for a salary. Driving consolidations are reimbursement reductions to cardiology clinics.
Though hospitals have struggled with cardiology reimbursements from the federal government’s Medicare and Medicaid programs, their reductions have been less than those offered private cardiology groups.
In particular, Medicare has shaved payments for many cardiology tests, even as physicians invest in equipment and incorporate the expertise into their practice. And reimbursements for catheter procedures has fallen, too, as the government’s financially burdensome Medicare program seeks ways to cut costs.
At the same time, an FTC study reports widespread concern in the health care industry and among patient groups about the loss of competition as cardiologists align with hospitals.
Two years ago the FTC signed off on the $50 million sale of Rockwood Clinic to Community Health Systems Inc.
That deal aligned Rockwood, including its cardiology practice, with CHS hospitals Deaconess Medical Center and Valley Hospital and Medical Center. It also ignited a flurry of moves by both Providence and CHS to collect clinics and pin down admissions loyalties from physicians and especially their insured patients.
In the wake of the Rockwood deal, Providence attempted to buy the two cardiology practices and later announced a new collaboration with Group Health.
CHS then purchased Inland Cardiology Associates last December.
Inland Cardiology is moving into the remodeled 10th floor of the Deaconess Health and Education Center. Rockwood – including its cardiology practice – is moving into the eighth and ninth floors.
Despite the competition between the hospitals, CHS did not ask the FTC to review the Providence cardiology buyout, said Deaconess spokeswoman Julie Holland.
“The FTC sent us a questionnaire,” she said. “I’m told that we complied with their request.”
CHS declined to release a copy of its correspondence with the FTC.
The company has not received notice of the FTC ruling, Holland said.
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