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Joplin court precedent aids Columbia-Cox dealmaking

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by Paul Flemming

SBJ Staff

A 3-year-old court decision dissuaded the Federal Trade Commission and Missouri's attorney general from opposing the sale of Columbia Hospitals in Springfield to Cox Health Systems.

Scott Holste, a spokesman for Attorney General Jay Nixon's office, said the FTC's 1995 attempt to block the sale of Joplin's Oak Hill Hospital to Freeman Hospital was denied by U.S. District Judge Dean Whipple, a decision upheld by the Eighth District Court of Appeals.

The two Joplin hospitals in February 1994 entered into an agreement to consolidate operations. In February 1995, the FTC filed a complaint in U.S. District Court seeking to block the consolidation. In June the court ruled against the FTC. The combined Freeman Hospital is now part of Cox Health Systems.

"After careful review, both the attorney general's office and the FTC reached the same conclusion; the standard that has been set by the federal courts" made the Cox acquisition of Columbia likely to pass anticompetitive muster, Holste said.

The case in the Joplin market in 1994 has similarities to the Cox acquisition of Columbia. Freeman and Oak Hill were the second and third largest hospitals in Joplin, with St. John's hospital there being the largest. And, Holste said, in many ways the regulatory case against the Cox deal is less persuasive.

"The FTC was unable to win a case where the facts were perhaps more compelling," Holste said. "You don't want to go into court without confidence."

Judge Whipple rejected the FTC's arguments in the Freeman case concerning the market area of Joplin. He said in his decision that the market area included many alternatives for health care besides the hospitals in Joplin alone.

Holste said the attorney general's office analysis determined that data about Springfield would make the market area here even larger and include more hospitals as viable competitors.

Holste said Attorney General Jay Nixon made the ultimate decision not to pursue attempts to block the Columbia sale.

Between 30 and 50 letters in opposition to the sale were received from patients and physicians, Holste said, but the legal precedent was the overriding factor in the decision not to oppose the deal.

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