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Real Estate Bisnow
May 30, 2008



When we heard the FTC filed a complaint requesting a federal court block the proposed merger between the Inova and Prince William health systems, our initial reaction was to call up our friend Knox Singleton at Inova to find out what was going on. But after watching Fox News, we decided we should be more fair and balanced. So we cruised over to New Jersey Ave. (we took the turnpike) to get the FTC's side of the story. We asked the Assistant Director with oversight of the merger, Matt Reilly, to explain why two health systems can't just get together.


Matt says the FTC's May 9 complaint does not block anything—but does ask a judge to do so—with a ruling expected at the end of July. He also clarified that there are two different court cases regarding the merger, neither of which has produced a decision. The first case will decide whether Inova and PWHS can consummate (+1 point for using a term doctors and lawyers can both understand) prior to a full administrative trial. And that's the second case: A full administrative trial. That's still in its earliest phases and does not have a start date. The FTC argues a judge should block any merger until a full trial on the merits is complete.


To explain why the FTC wants to block the merger, Matt brought in his Deputy Assistant Director Norm Armstrong (not that Matt needs help, but Norm was born in VA, so we'll hear him out). Based on geography and services provided, the FTC considers Inova and PWHS in direct competition. Therefore, Norm says the FTC's job was to weigh the merger's potential for improved quality of care vs. consumer benefits of competition. It ultimately decided the lack of competition would strip health care plans of negotiating leverage and drive up every Northern Virginia consumer's healthcare rates. The FTC investigates all hospital mergers and has approved previous Inova deals, most recently with Loudoun Hospital, but says it's a different scene now because there are no large hospitals in the area and a post-merger Inova would control 73% of Northern Va. beds.


Both Matt and Norm stressed PWHS does not need a merger to achieve high quality care. In fact, they argue the hospital already provides award-winning care across many measures. We asked for clarification on how the FTC assesses quality of care, but Matt says we'll have to wait until the trial for specifics. They both agreed faking injuries to investigate the hospital is not one of their methods, but that candy stash does make Matt's office a great staging location for a faux diabetic emergency. Regardless of the outcome, Matt has nothing but praise for both hospitals: Both his daughters, the youngest only 4 months, were born at Inova Fairfax.

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