For Release: May 9, 2008
Contact: J. Tucker Martin or David Clementson
Email: tucker.martin@oag.state.va.us or dclementson@oag.state.va.us
Phone: 804-786-2071
Office of the Attorney General Joins FTC in Motion for Preliminary Injunction in Proposed Inova Health System and Prince William Health System Merger
RICHMOND - Attorney General Bob McDonnell today announced that the Commonwealth of Virginia, through the Office of the Attorney General, will be joining the Federal Trade Commission in a motion for a preliminary injunction to hold open the merger between Inova Health System and Prince William Health System pending an administrative trial by the Federal Trade Commission to determine whether the merger should be permitted.
Both Inova and Prince William Health System operate hospitals in Northern Virginia. Inova currently owns five hospitals in Northern Virginia, including hospitals in Fairfax, Fair Oaks, Loudoun and Alexandria, while Prince William Health System operates Prince William Hospital in Manassas and a physician office and outpatient surgical center in Haymarket.
The parties announced their intention to merge in mid-2006. The Office of the Attorney General’s antitrust section and the FTC have been evaluating the proposed merger since then. The role of the Office of the Attorney General in evaluating proposed mergers is to protect the interests of Virginia’s consumers and uphold the state and federal antitrust laws.
“Inova Health System and Prince William Health System are both excellent medical care providers with good records of patient service,” McDonnell said. “However, during the course of our evaluation of the potential competitive effects of this merger, we identified several material concerns regarding the impact of the merger on the cost and competition for inpatient hospital services for consumers and businesses in Prince William County. In order to ensure that the interests of all citizens in the region are protected, we believe our statutory obligation is to delay the merger until the FTC conducts its full and fair administrative hearing under the law. While the stated purpose of the merger is well-intentioned, only a complete hearing will determine whether the merger is in the long term interests of the residents of Northern Virginia, and consistent with the antitrust laws of the United States and Virginia.”
The FTC is expected to file today an administrative complaint requesting a full hearing before an FTC hearing officer. The Office of the Attorney General is not allowed to participate in the agency trial, but will join the FTC’s motion for a preliminary injunction, to be filed next week in the federal district court for the Eastern District of Virginia in Alexandria. The injunction, if granted, would prohibit Inova and Prince William from merging until the trial is completed and a favorable ruling is made.
The merger, if approved, would further consolidate Inova’s dominant position in the Northern Virginia hospital market, which includes the counties of Arlington, Fairfax, Loudoun, Prince William and Fauquier, and the independent cities of Alexandria, Fairfax City, Falls Church, Manassas and Manassas Park. If the merger goes through, the only non-Inova hospitals remaining in the regional market would be Virginia Hospital Center in Arlington, HCA Hospital in Reston, Potomac Hospital in Woodbridge, which has an affiliation with Inova, and Fauquier Hospital in Warrenton. None of these hospitals has more than a 12% market share of hospital beds in the Northern Virginia area. Inova’s current market share of hospital beds is almost 67 percent, and the merger with Prince William would increase that market share to over 73 percent.
