Union Health is making a new bid to Indiana regulators to buy its rival hospital in Terre Haute as the door looks poised to close on such deals.<\/p>\n
The nonprofit health system is trying to leverage an existing state law to acquire Terre Haute Regional Hospital, the only other acute care hospital in Vigo County. After withdrawing its initial application in November amid pushback, Union has shifted its pitch to emphasize what it describes as Regional\u2019s \u201cdeclining position\u201d while offering more concrete promises, such as limits on price increases.<\/p>\n
Union submitted its new application<\/a> on Feb. 5 as Indiana lawmakers were attempting to nix such mergers in their state. Lawmakers then watered down a bill that threatened to forbid Union\u2019s deal altogether, with the amended legislation now barring mergers sought after Feb. 15, leaving an opening for Union. That means the proposed merger will next face a showdown with the administration of Indiana\u2019s new governor, which has signaled opposition to such deals.<\/p>\n Indiana is among the latest states reconsidering Certificate of Public Advantage laws that greenlight hospital monopolies. This year, Tennessee lawmakers introduced a bill<\/a> to restructure state oversight of these mergers after an attempt last year<\/a> to repeal its COPA law. In 2023, Maine repealed its COPA law, joining Minnesota, Montana, North Carolina, and North Dakota.<\/p>\n \u201cI would hope that they are reconsidering the laws because of the research on the long-run harms of COPAs,\u201d said Christopher Garmon<\/a>, a University of Missouri-Kansas City economist who has studied COPA mergers.<\/p>\n Indiana is one of 19 states that still have COPA laws, which allow mergers that the Federal Trade Commission otherwise considers illegal because they reduce competition and often create monopolies.<\/p>\n In exchange for approval of these deals, the merging hospitals typically agree to meet conditions imposed by their state to mitigate the harms of a monopoly. But health care economists and the FTC have said that state oversight cannot replace competition and that these mergers ultimately harm patients.<\/p>\n Union Health\u2019s first application faced pushback. The state\u2019s Department of Health received hundreds of comments<\/a>, with most opposing the deal, according to a review of documents KFF Health News obtained through a state public records request. Doctors, health economists, and the FTC were among those who called on state regulators to deny Union\u2019s proposal.<\/p>\n Union pulled its application<\/a> in November, just days before the state was due to rule on the deal.<\/p>\n When Union filed its new application in early February, this time it promised a slew of concrete commitments and pledges to improve residents\u2019 health in the largely rural communities that surround Terre Haute. Among them were promises to keep both hospitals\u2019 emergency rooms open and inpatient services in operation, and to tie increases in hospital charges to the consumer price index for medical care, essentially establishing a cap so charges don\u2019t exceed medical inflation.<\/p>\n It also recast its pitch to describe Regional as a hospital in decline, which Union said puts the region at risk of losing access to services if the merger is not approved. Tennessee-based HCA Healthcare owns Terre Haute Regional.<\/p>\n In that scenario, Union warned, if Regional were to close, the health system would essentially have a monopoly anyway, \u201cwithout any oversight, terms, or conditions\u201d of a COPA. Instead, it argued, a green light from state regulators could avert a hospital closure and guarantee state oversight of the combined hospital system.<\/p>\n Union\u2019s first application did not argue that the merger was necessary for Regional to remain viable. In public comments submitted in September<\/a> and March<\/a>, the FTC argued to state regulators that both hospitals are \u201cfinancially stable,\u201d adding that Regional is \u201cpart of the largest hospital system in the country with tremendous financial resources.\u201d It also cited hospital financial reporting that showed Terre Haute Regional Hospital\u2019s profits were better than those of most other hospitals in the country.<\/p>\n \u201cThis repackaged COPA application presents the same problems as before,\u201d Clarke Edwards, acting director of the FTC\u2019s Office of Policy Planning, said in a statement on March 17<\/a> after the commission unanimously opposed the merger.<\/p>\n HCA did not respond to questions about Union\u2019s characterization that Regional is a hospital in decline.<\/p>\n Despite Union\u2019s assurances that the merger would benefit the region, an analysis of the first proposal found the opposite. Zack Cooper<\/a>, a health economist and an associate professor at Yale University, estimated that the price of care would rise by at least 10%, 500 jobs would be lost, and nurses\u2019 pay would decline by at least 7%.<\/p>\n Despite the new application and new promises, \u201cthe nature of the deal hasn\u2019t changed,\u201d Cooper said. He said that his findings remain unchanged and that Union stands to benefit \u2014 not the community.<\/p>\n \u201cLife is easier for a firm if you face less competition,\u201d he said. \u201cThere\u2019s less pressure to compete on quality. There\u2019s less pressure to compete on price.\u201d<\/p>\n In January, state Sen. Ed Charbonneau<\/a>, a Republican and a key architect of Indiana\u2019s 2021 COPA law<\/a>, introduced the legislation to repeal the law<\/a>, which would have foreclosed Union\u2019s chance at a possible second attempt at the merger.<\/p>\n In February, seated side by side at a state Senate health committee hearing, Union Health CEO Steve Holman, Terre Haute Chamber of Commerce President Kristin Craig, and state Sen. Greg Goode<\/a>, a Republican representing the region, testified against the bill.<\/p>\n Holman told lawmakers the merger would improve the health of the region. He also noted that the hospital system had already spent $3 million on legal fees pursuing the deal. He said it seemed like lawmakers were attempting to cripple Union\u2019s chances. \u201cWhy has this come up now?\u201d Holman asked.<\/p>\n The bill to repeal the COPA law advanced out of committee by a 7-4 vote. State Sen. Mike Bohacek<\/a>, a Republican who represents a region a three-hour drive north of Terre Haute, said he voted against repealing the law out of deference to local officials.<\/p>\n \u201cI have no dog in this fight,\u201d Bohacek said.<\/p>\n Charbonneau later amended his bill<\/a>, winning support from Union and Goode. The new version sailed through the Senate. It is now backed by two powerful Republican representatives in the House: Brad Barrett<\/a>, chair of the Public Health Committee, and Bob Heaton<\/a>, House majority whip. Heaton represents parts of Vigo County.<\/p>\n Union Health spokesperson Amanda Scott said in an email to KFF Health News that Union and Regional Hospital \u201crecognize the significance of a final approval\u201d and that Union views this as its last chance to acquire its rival.<\/p>\n But Indiana\u2019s new governor, Republican Mike Braun, took office in January vowing to crack down on consolidation, especially in health care.<\/p>\n Earlier this year, Braun tapped Gloria Sachdev<\/a> to lead a newly created Cabinet position overseeing the state\u2019s health care agencies, including the state Department of Health, which will decide on the merger.<\/p>\n As CEO of the Employers\u2019 Forum of Indiana, a coalition of businesses that has combated high hospital prices, Sachdev was an outspoken critic of the proposed merger in Terre Haute. In an October opinion piece<\/a> in The Indianapolis Star, she urged regulators to consider how these mergers can crush communities.<\/p>\n Sachdev, now the state\u2019s secretary of health and family services, didn\u2019t answer questions on the new bid. After KFF Health News asked the governor\u2019s office whether Braun has final authority over the fate of Union\u2019s merger request, Department of Health spokesperson Greta Sanderson provided a joint statement from the agency and the office of the governor: \u201cGov. Braun will expect to be informed, ask questions, and ensure that whatever decision is made is thoughtful and objective with the best interests of Hoosiers in mind.\u201d<\/p>\n The state has until June 21 to review the merger application before rendering a decision, according to the Department of Health. The public can comment<\/a> on the proposal through March 23.<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/p>\nUSE OUR CONTENT<\/h3>\n