The justices ruled unanimously Tuesday that lower courts improperly dismissed complaints that the merger, aided by a public hospital authority, created a monopoly in hospital services in Albany, Ga.
The Federal Trade Commission tried to block the deal by arguing that it violated federal antitrust law.
Justice Sonia Sotomayor said in her opinion for the court that an exception in antitrust law for actions taken by a state or its agencies — in this case, the hospital authority — did not shield the transaction from federal antitrust concerns.
Lower federal courts allowed Albany’s Phoebe Putney Memorial Hospital to buy Palmyra Medical Center from Hospital Corporation of America for $195 million over the FTC’s objection.
Both hospitals now are nominally owned by the Hospital Authority of Albany-Dougherty County, but run by the Phoebe Putney Health System under long-term leases. The money for the Palmyra purchase came from the health system, not the authority.
The court has long accepted that the some business deals that lead to monopolies that otherwise would raise antitrust concerns are allowable if they are done by states. But in such cases, the states have to explain clearly why competition is not in the public interest and they have to ensure a level of control and oversight of the monopolies.
“We hold that Georgia has not clearly articulated and affirmatively expressed a policy to allow hospital authorities to make acquisitions that substantially lessen competition,” Sotomayor said.
The hospital authority tried to persuade the justices that the merger was the cheapest way to find additional bed space and still serve the poor. But not a single justice accepted that argument in the end.
The case is Federal Trade Commission v. Phoebe Putney Health System, 11-1160.