Morrisey

CHARLESTON -- West Virginia Attorney General Patrick Morrisey said his office’s antitrust division has reached an agreement with Cabell Huntington Hospital Inc. in its acquisition of St. Mary’s Medical Center.

The agreement was filed Friday morning in Cabell County Circuit Court, Morrisey said.

The attorney general said the deal establishes a “series of conditions” to ensure Cabell’s acquisition of St. Mary’s complies with the West Virginia Antitrust Act, the federal Sherman Antitrust Act and all other applicable state and federal laws.

“My office takes its antitrust responsibility very seriously,” Morrisey said. “We strive to make sure any mergers or acquisitions preserve economic competition and do not have a negative effect on the state and its citizens.”

In November, Cabell announced an agreement to acquire St. Mary’s after the Pallottine Missionary Sisters, the Catholic-affiliated organization that had operated the hospital for 90 years, decided to end their sponsorship of the medical center.

“This acquisition represents the combination of two large and vitally important health-care centers in the greater Huntington area,” Morrisey said Friday.

“St. Mary’s Medical Center and Cabell Huntington Hospital represent the seventh and 11th largest private employers in the state, respectively, and the top two employers in Cabell County. Serving residents of three states, the combined hospital company would represent the second-largest hospital chain in the state.”

Under the agreement, Cabell and St. Mary’s do not admit to any violations of state or federal antitrust laws.

The hospitals voluntarily cooperated with the Attorney General’s Office in a good faith effort in the interest of promoting appropriate standards of conduct within the health-care industry, Morrisey said.

As part of the agreement, both hospitals agree to adhere to the following conditions for the seven-year period following the acquisition:

- Cabell will agree that St. Mary’s will be maintained as a free-standing, general acute care, faith-based organization;

- Neither hospital will increase its service rates beyond the benchmark rate established by the West Virginia Health Care Authority;

- If the combined operating margins of the hospitals exceed an average of 4 percent during any three-year period, the hospitals’ rates will be reduced by the amount of excess for the following three years;

- Both hospitals will release employees from any non-compete agreements following the termination of their employment;

- The hospitals will maintain open staffs and grant privileges to all qualified physicians, and not terminate privileges to those who start offering services in competition to the hospitals (excluding groups that historically have operated under exclusive agreements); and

- The hospitals will not oppose the award of a certificate of need by the state Health Care Authority to any health-care provider that seeks to provide services in their market area (excluding the request from any inpatient hospital that does not accept Medicaid and/or uninsured patients).

The hospitals have agreed to implement community wellness programs for those medically underserved areas and report on the programs each year to the Attorney General’s Office.

They also have agreed to develop quality and population health goals; establish a fully integrated and interactive medical record system at both facilities; notify the Attorney General’s Office within 90 days of any proposed addition or deletion of any health-care service line; and continue to accept Ohio and Kentucky Medicaid patients at in-state provider rates.

“Unfortunately, with the recent increased federal regulation in the health-care industry, the trend of hospital consolidation will likely increase over the coming years as hospitals struggle to deal with the increased costs of regulation,” Morrisey explained.

“However, I believe given the conditions negotiated in our agreement, the best interests of our citizens will be protected."

U.S. Rep. Evan Jenkins, R-W.Va., called the deal a "significant step" in the hospital merger. Jenkins represents the Third Congressional District, which is based in Huntington and includes Bluefield, Princeton and Beckley.

"This agreement will ensure our state and federal consumer protection laws will be upheld, both facilities will continue to operate, competition will be preserved, rates will be controlled and St. Mary’s faith-based mission will be preserved,” Jenkins said in a statement.

“I firmly believe that this important agreement would not have been achieved without the commitment of both hospitals to act in the best interest of their patients and their employees, and the hard work and healthcare expertise of Attorney General Morrisey.”

To read the full agreement, which includes additional details on conditions, click here.

Morrisey said his office will support the hospital acquisition and “communicate its support” to the Federal Trade Commission, which also is reviewing the matter.

Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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