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Wednesday, March 27, 2024 | Back issues
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North Dakota Clinic Merger Hits Eighth Circuit

A panel of Eighth Circuit judges grappled Tuesday with the question of whether two of the largest health care providers in North Dakota should be allowed to merge amid concerns the deal will result in a monopoly detrimental to patients in the Bismark area.

ST. PAUL, Minn. (CN) – A panel of Eighth Circuit judges grappled Tuesday with the question of whether two of the largest health care providers in North Dakota should be allowed to merge amid concerns the deal will result in a monopoly detrimental to patients in the Bismark area.

The Federal Trade Commission and North Dakota have thus far successfully blocked Sanford Health’s proposed acquisition of Mid Dakota Clinic in an effort to preserve healthy competition within the Bismarck-Mandan metropolitan region. After the state and FTC sued, U.S. District Judge Alice Senechal granted an injunction last December.

Sanford Health is currently the closest rival of Mid Dakota Clinic, which is exactly why the merger of the two would significantly reduce the competition for patients covered by commercial insurance, according to regulators. The companies actively compete to join insurers’ provider networks, and the merger would eliminate that competitive pressure.

Attorney Bob Cooper argued Tuesday morning on behalf of Sanford Health, Sanford Bismarck and Mid Dakota Clinic before the Eighth Circuit, telling the three-judge panel that the term “monopoly” is not a simple mathematical equation.

“In this case, if the transaction is consummated, post-merger Sanford will have neither the ability to control price or exclude competition in a properly defined market,” Cooper said in objection to the merger being referred to as a monopoly.

Cooper claimed the lower court made several reversible legal errors by improperly shifting the burden of persuasion to the health care providers, who he said were required to prove that no anti-competitive effects will be created from the merger.

“These legal errors led to a decision that treats the Clayton Act as a law that proscribes any merger, unless the merging parties can prove their transaction is at least competitively neutral….that’s not the law,” he said, referring to the 1914 antitrust law.

Attorney Michele Arington, arguing on behalf of the FTC and North Dakota, assured the panel that no legal error was made and the district court’s decision was based purely on facts bolstered by abundant evidence.

“Substantial lessoning of competition here is unquestionable. It is really the elimination of their only competitor in some of these service markets,” she said, adding that market power is exercised at the bargaining stage between the health care providers and the insurers.

U.S. Circuit Judges Steven Colloton, Bobby Shepherd and David Stras comprised Tuesday’s Eighth Circuit panel. They did not specify when a ruling would be issued.

Thus far, the FTC has prevailed in each of its last seven litigated challenges to health care provider transactions, dating back to 2011, according to Westlaw.

The health care providers’ attorney, Cooper, did not immediately respond Tuesday to a request for comment. The FTC had no comment on the Eighth Circuit hearing.

Bruce Hoffman, director of the FTC’s Bureau of Competition, said in a statement after last year’s injunction ruling, “This merger would likely reduce competition, resulting in higher prices and lower quality of adult primary care physician services, pediatric services, obstetrics and gynecology services, and general surgery physician services in that area of North Dakota.”

Categories / Appeals, Consumers, Health, Regional

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