Attorney General cancels merger of Dartmouth and parent company CMC

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May 15 – A proposal to combine two of the state’s largest hospital systems was rejected on Friday, over fears it would hurt competition and could drive up prices for care.

Shutting down Dartmouth Health’s parent company GraniteOne and Catholic Medical Center’s proposed combination, state regulators said their concern about less competition and the potential for higher costs meant the deal would be against the law without significant concessions from either group – concessions no one was prepared to make last week.

The newly renamed Dartmouth Health is the state’s largest private employer and oversees Dartmouth Hitchcock Medical Center and several other hospitals and clinics in the state. Granite-One Health is the parent company of Catholic Medical Center and two other hospitals. The two providers said the union would not be a merger but rather a combination of financial, administrative and clinical systems.

In a report released Friday, the New Hampshire Department of Justice’s Charitable Trusts Unit said it believed the combination deal would mean less competition in health care in New Hampshire, and therefore judged the illegal agreement. The state warned the impact would have been felt most keenly in the Manchester area, home of the Catholic Medical Center and a large outpatient clinic operated by Dartmouth, and in the southwestern part of the state, where GraniteOne’s Monadnock Community Hospital is not far from the Dartmouth-owned Cheshire Medical Center.

“Free, fair and robust competition is essential to providing employers and patients with options for lower-cost, high-quality health care services,” Attorney General John Formella said in a statement Friday. “Our state has seen significant health care consolidation over the past few years, and this transaction to combine two of our four largest systems is unacceptable without the proper consumer protections in place.”

The report did not address other aspects of the deal, such as leadership and policy divisions to keep Catholic ethical and religious guidelines intact at Catholic Medical Center, but separate from other hospitals — issues who derailed a 2010 attempt to merge Catholic Medical Center. with Dartmouth Health.

“While we disagree with the outcome of the regulatory review and are deeply disappointed, we respect the process that led to this decision,” Dartmouth Health CEO Joanne Conroy said in a statement on Friday. a statement.

GraniteOne, in a statement, echoed the disappointment. “Based on the public forums we held last fall, it was clear how supportive the community was of our organizations and recognized the benefits this combination would have brought,” the statement said.

In public forums about the deal in October 2021, Conroy and Catholic Medical Center President and CEO Alex Walker touted the deal as a way to cut costs for specialty care — by sending more patients in Dartmouth Hitchcock instead of going to hospitals in Boston. The agreement was also intended to make it easier to refer patients from Catholic Medical Center or other GraniteOne hospitals to Dartmouth, and to enable more doctors from Dartmouth to practice in Manchester.

“Despite the unforeseen challenges of the pandemic, Dartmouth Health and GraniteOne remained committed and focused on how we would deliver the benefits and promise of the combination for our patients and communities,” she said. “But it has become clear to us that those benefits and promises that we envisioned years ago are no longer practical and realistic in today’s environment.”

Dartmouth continues to expand in other avenues, including a partnership to provide specialist telemedicine care at Valley Regional Hospital in Claremont.

But staffing issues continue to plague both hospital groups, as well as others in New Hampshire, and Dartmouth announced last week that it must stop accepting new primary care patients.

Mergers Denied

The combination deal is the latest in a series of attempts by New Hampshire hospitals and medical centers to merge with other providers — and the latest to be blocked by state regulators.

The state approved a deal to sell Lakes Region General Hospital and Franklin Hospital to Concord Hospital in 2020 as Laconia and Franklin Hospitals filed for bankruptcy and faced closure. But without the threat of an imminent shutdown, state regulators have blocked hospital mergers in recent years amid growing consolidation in the health care and health insurance sectors.

Last year, Massachusetts General Hospital and Wentworth-Douglass Hospital halted a proposed merger with Exeter Hospital after state regulators signaled the move would reduce competition and was therefore illegal.

The state has made a similar argument that the deal between Dartmouth Health and GraniteOne was illegal because it would hinder competition — and the state hopes competition will help keep prices lower.

“(B) based on the review by the Consumer Protection and Antitrust Bureau, the Attorney General has reason to believe that the proposed transaction is unlawful because it is likely to have an adverse impact on competition for certain healthcare services in and around Manchester, the South West region, as well as for certain statewide services,” the report read. “This means, in simple terms, that the Attorney General has determined that the proposed transaction is not authorized by applicable law.”

In a statement accompanying the report, the attorney general’s office said hospitals could not make concessions that the state says would have protected competition.

“The Attorney General has offered remedies that are consistent with remedies used in similar transactions across the country,” Formella’s statement read. “At this point, despite considerable time working with these health care providers to try to find a solution, no agreement has been reached that would satisfy the state’s concerns.”

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