Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 15, 1994 TAG: 9402150177
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: LAURA WILLIAMSON STAFF WRITER
DATELINE: LENGTH: Medium
But even if the deal could pass muster with the U.S. Justice Department, it is not one that Carilion Health System cares to pursue, President Tom Robertson said. He emphasized that no offer had been made to Carilion, which owns the two not-for-profit hospitals competing with Lewis-Gale.
A merger last week between Hospital Corporation of America, which owns Lewis-Gale Hospital in Salem, and Louisville, Ky.-based Columbia Healthcare Corp. raised speculation that Carilion's Roanoke hospitals might soon be asked to join the $10 billion network.
Richard Scott, president and chief executive officer of what has become the largest health-care service company in the world, has a reputation for trying to dominate markets into which he buys. Scott reportedly expressed an interest in Carilion during a recent visit to Lewis-Gale.
A spokeswoman for Scott would neither confirm nor deny Columbia/HCA Healthcare Corp.'s interest in buying Carilion or any of the seven hospitals it owns in Western Virginia.
Spokeswoman Lori Fein said if Columbia were to make an offer, it likely would not pursue both Roanoke Memorial and Community hospitals, because that would create a monopoly in the Roanoke Valley market, a situation likely to raise objections from the Justice Department.
Fein would not rule out an attempt to purchase one of the two hospitals.
"If it makes sense for that market, we would consider it," she said.
But Carilion would not.
"We're not interested in selling any piece" of Carilion, Robertson said.
Carilion fought long and hard during the late 1980s to bring Community and Roanoke Memorial hospitals together, Robertson said. It spent nearly three years and $3 million fighting the Justice Department, which argued the merger would reduce competition and allow Carilion to raise prices.
Carilion argued that consolidating hospitals would save money by eliminating duplication of services and creating a more efficient system. It also expected to save millions of dollars in construction by moving some services, such as maternity care, from Roanoke Memorial to Community.
Lewis-Gale sided with the government.
Even if Carilion wanted to sell a piece of its operation to Columbia/HCA, it still could run into trouble with antitrust laws. The Justice Department could oppose the deal if it concluded, as it did in 1988, that such a plan would allow one company to unfairly dominate the market.
The Justice Department makes exceptions for hospital mergers when the companies can show one of several things, said William Kopit, the Washington, D.C., attorney who represented Carilion in its fight against the government.
If the merging companies can show that consumers would still have access to other hospitals within the market - but outside the immediate area - the deal may be approved, he said. For example, the government recently allowed the only two hospitals in Manchester, N.H., to merge because consumers had access to health-care facilities elsewhere in the region.
That argument likely wouldn't work in Roanoke, Kopit said.
Government attorneys objected to a broad definition of Carilion's market in the 1980s. A jury in U.S. District Court agreed but approved the merger anyway. It found that Roanoke Memorial and Community hospitals competed only within the Roanoke Valley and a small part of six surrounding counties.
The Justice Department also makes exceptions for deals in which the merging hospitals offer complementary, not overlapping, services, Kopit said.
That was the case in Lynchburg, where Virginia Baptist and Lynchburg General hospitals merged in 1987. But that is not the case in Roanoke, where Carilion and Lewis-Gale actively compete for patients.
A third scenario that calls for making exceptions to federal antitrust laws occurs when one of the hospitals being purchased is financially weak and in danger of failing, said Kopit, who is also special antitrust counsel to the American Hospital Association.
Neither Community nor Roanoke Memorial is in poor financial standing.
"I think it's highly unlikely that they would permit a purchase of Carilion," Kopit concluded. "I can't say it's impossible."
by CNB