The Federal Trade Commission is prepared to file suit to halt the proposed sale of the Holy Cross hospital system in Utah to HealthTrust Inc. if the parties go ahead with their plan.
"The FTC will allege that the acquisition would significantly decrease competition for inpatient acute-care hospital services in the Salt Lake City area," said a press release from the FTC's public affairs staff.The five-member FTC voted Tuesday to go to court if the sale were to proceed. The vote was 3-1, with one commissioner dissenting and one not participating.
HealthTrust already operates six hospitals in Utah, two of which compete with the Holy Cross chain: Pioneer Valley Hospital and Lakeview Hospital, both in the Salt Lake metropolitan area, according to the FTC.
The Catholic hospitals that HealthTrust has been seeking to acquire are Holy Cross, Salt Lake City; Holy Cross Jordan Valley Hospital, West Jordan; and St. Benedict's Hospital, Ogden. In addition, 10 clinics along the Wasatch Front were to be part of the transaction, which was announced Oct. 1, 1993.
Immediately after the sale was proposed to the for-profit chain, groups in Salt Lake City and Ogden opposed it. Then-Catholic Bishop William K. Weigand led the battle against the sale, campaigning with ecclesiastical authorities from Rome to Washington to block it, hoping to get another Catholic charity to take over the hospitals.
But near the end of November he gave up the fight, saying Holy Cross Health System and HealthTrust Inc. had signed an unbreakable letter of intent.
At the time, HealthTrust and the national Holy Cross Health Systems Corp., based in South Bend, Ind., said they expected to sign the final purchase agreement the next week.
Now the FTC is threatening to sue if the sale proceeds.
"We don't normally discuss specifics of an ongoing case or investigation," said James Egan, an attorney for the FTC in Washington, D.C. But, he added, the commission has authorized lawyers to "file for a TRO (temporary restraining order) and a preliminary injunction in district court in Salt Lake City.
"And we will do so when it becomes necessary."
By district court he means the federal court, which hears FTC lawsuits.
Whether and when the suit is filed depends on whether the parties inform the FTC they intend to consummate the sale by a certain date. "We don't file until we have to," Egan said.
Asked if that means HealthTrust and Holy Cross must notify the FTC before they go ahead with the sale, he said, "That's right. We would have filed already if we hadn't been given an assurance that they would notify us first."
"We're really taking a look at what our options are," said Amy Smessaert, spokeswoman for the Holy Cross Health System at the Indiana headquarters. If the FTC had not intervened, "I imagine we would have worked toward a closing date," she said.
But the parties held off on setting a closing date, waiting for approval from the FTC.
"We're just real disappointed," she said. "We're real disappointed."
Jeff Hasen, a spokesman for HealthTrust who is based in Utah, would only say that the parties are weighing their options. Asked whether one of the options was to call off the sale, he refused to answer except to say they are weighing their options.
"We're disappointed that the Federal Trade Commission has chosen to take this course," said HealthTrust regional vice president Kent Wallace, in a press release.
"We have maintained all along that the sale would benefit over 85 percent of the state's residents by providing them with the option of a cost-effective, integrated health-care delivery network."
Other statements released by the parties as they reacted to the FTC opposition include:
- Sister Catherine O'Brien, president of the Congregation of the Sisters of the Holy Cross: "We, as sponsors of Holy Cross Health System Corp., remain steadfast in our support of the leadership of the health system and the sale . . . .
"We have the understanding and support of diocesan authorities that this transaction would be in the best interest of the future health-care needs of the Wasatch Front community . . . We pray for a prompt, fruitful conclusion of this matter for the sake of all who are affected by it."
- Sister Patricia Vandenberg, president and chief executive officer of Holy Cross Health System Corp.: "We, too, are disappointed with the Federal Trade Commission's decision.
"As we explore our options in light of the ruling . . . remain committed to the continuation of an integrated delivery network in this region to best serve the community's health needs."