FTC files injunction to stop merger of Prince William hospitals

By Kipp Hanley

Published: May 13, 2008

The Federal Trade Commission filed a preliminary injunction in the U.S. Eastern District Court on Monday to stop the Inova Health System Foundation from acquiring the Prince William Health System Inc., which owns Prince William Hospital.

A recent FTC press release stated that the commission voted unanimously to approve a complaint challenging the deal.

The complaint held that if the acquisition went through, competition would be eliminated and health care costs would go up in Northern Virginia, the release stated.

“There is no question that Northern Virginia residents have benefitted from the robust competition between Inova and Prince William Hospital through better services and lower prices,” wrote Jeffrey Schmidt, director of the FTC’s Bureau of Competition, in the press release. “If Inova acquires Prince William Health System, this vital competition will be lost, health care prices will increase, and many residents will be forced to accept reduced health care coverage or no coverage at all.”

Trade commission spokesman Mitchell Katz could not predict when the administrative trial in federal district court would take place, but said the commission would probably expedite the process.

The action in federal district court was brought jointly with the Attorney General of the Commonwealth of Virginia.

After the administrative law judge issues an a opinion, the loser can appeal to the full commission. Further appeals would be available at the higher appellate level as well, Katz said.

In a prepared statement Michael J. Schwartz, Prince William Health System president and CEO said the two companies were “extremely disappointed” that the deal was being challenged.

“The merger enjoys broad support from the community because residents,

businesses and community leaders understand that it is critical towards addressing current and emerging health care needs in one of the nation’s fastest growing counties,” Schwartz said.

The Prince William organization sought the $200 million deal with Inova, which Schwartz said would “transform PWHS into a high-quality, state-of-the-art hospital and ensure that PWHS continues to serve all residents of Prince William County, regardless of their ability to pay for such care.”

Speaking for Inova, Schwartz said the two companies would fight the challenge.