Indiana health system withdraws merger application after regulator pushback

Dive Brief:

• An Indiana health system withdrew its Certificate of Public Advantage application to acquire a competing hospital on Monday, months after the deal was criticized by federal regulators for potentially raising prices and worsening health outcomes for patients. 
• Union Health said it still wants to buy Terre Haute Regional Hospital, located about five miles away from its main facility on the state’s western border, under a COPA — a controversial mechanism that allows mergers to go through that might otherwise violate antitrust law. 
• The providers pulled the current application “to allow time for Union Health and Terre Haute Regional to continue to work with IDOH [Indiana Department of Health], to ensure the benefits, including improved access, quality, prevention and early intervention, are outlined in the new application,” Union said in a statement.

Dive Insight:

Union first announced its plans to acquire Terre Haute Regional from major for-profit hospital operator HCA Healthcare more than a year ago.

Under COPAs, states sign off on hospital mergers that might otherwise violate federal antitrust laws in exchange for heightened state oversight. Indiana, which passed its COPA law in 2021, is one of 19 states that allow such arrangements. 

The hospitals argued their deal would improve quality and access to care, calling the COPA an “unprecedented opportunity” to boost the surrounding community’s health and wellness, in a Monday statement. 

But the merger received pushback from regulators, who argued there wasn’t any evidence to suggest cost savings or quality benefits from the deal would outweigh competitive harms.

The FTC has argued against states’ use of COPAs. In 2022, the agency published a report warning states against the arrangements, saying the oversight mechanisms are temporary and leave behind hospital monopolies.  

The Federal Trade Commission noted the impact could be particularly severe in Vigo County, where the combined system would hold a 74% market share for inpatient hospital services for commercially insured patients. 

The agency cheered the news that Union would pull its COPA application, saying the deal would raise healthcare costs, reduce access to quality care and lower wages for hospital workers. 

“We are heartened that the Indiana Department of Health appears to be taking seriously the many concerns expressed by the public about this merger, and hope they will ultimately deny the COPA,” Hannah Garden-Monheit, director of the FTC’s office of policy planning, said in a statement.

Doctors, researchers and other residents also pushed back against the COPA for Union and Terre Haute Regional, according to KFF Health News.  

If the merger goes through under the COPA, the combination could increase commercial prices between 10% and 30%, according to a comment filed in September by Zack Cooper, an associate professor of public health and economics at Yale University. 

The deal could also increase insurance premiums, lower wages in the area and lead to job losses, Cooper wrote. 

Union and Terre Haute Regional didn’t respond to questions about when they would file a new COPA application, or additional details on why they pulled the first attempt. The providers have until July 1, 2026, to resubmit, according to state law.