Alan B. Miller and Universal Health Services; Analysis of Agreement Containing Consent Orders To Aid Public Comment, 62238-62240 [2012-25140]

Download as PDF 62238 Federal Register / Vol. 77, No. 198 / Friday, October 12, 2012 / Notices Act of 1956 (12 U.S.C. 1841 et seq.) (BHC Act), Regulation Y (12 CFR part 225), and all other applicable statutes and regulations to become a bank holding company and/or to acquire the assets or the ownership of, control of, or the power to vote shares of a bank or bank holding company and all of the banks and nonbanking companies owned by the bank holding company, including the companies listed below. The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The applications will also be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States. Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than November 8, 2012. A. Federal Reserve Bank of St. Louis (Glenda Wilson, Community Affairs Officer) P.O. Box 442, St. Louis, Missouri 63166–2034: 1. C & J Bennett Family Limited Partnership, Hardinsburg, Kentucky; to become a bank holding company by acquiring at least 52 percent of the voting shares of Farmers Bancshares, Inc., and thereby indirectly acquire voting shares of Farmers Bank, both in Hardinsburg, Kentucky, and Leitchfield Deposit Bank & Trust Company, Leitchfield, Kentucky. Board of Governors of the Federal Reserve System, October 9, 2012. Robert deV. Frierson, Secretary of the Board. [FR Doc. 2012–25119 Filed 10–11–12; 8:45 am] BILLING CODE 6210–01–P wreier-aviles on DSK5TPTVN1PROD with NOTICES FEDERAL TRADE COMMISSION [File No. 121 0157] Alan B. Miller and Universal Health Services; Analysis of Agreement Containing Consent Orders To Aid Public Comment Federal Trade Commission. Proposed Consent Agreement. AGENCY: ACTION: VerDate Mar<15>2010 13:59 Oct 11, 2012 Jkt 229001 The consent agreement in this matter settles alleged violations of Federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations. DATES: Comments must be received on or before November 7, 2012. ADDRESSES: Interested parties may file a comment at https:// ftcpublic.commentworks.com/ftc/ uhsascendconsent/ online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write ‘‘Universal Health Services, File No. 121 0157’’on your comment, and file your comment online at https://ftcpublic.commentworks.com/ ftc/uhsascendconsent/, by following the instructions on the web-based form. If you prefer to file your comment on paper, mail or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Room H–113 (Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580. FOR FURTHER INFORMATION CONTACT: Janelle Filson (202–326–2882), FTC, Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for October 5, 2012), on the World Wide Web, at https://www.ftc.gov/ os/actions.shtm. A paper copy can be obtained from the FTC Public Reference Room, Room 130–H, 600 Pennsylvania Avenue NW., Washington, DC 20580, either in person or by calling (202) 326– 2222. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before November 7, 2012. Write ‘‘Universal Health Services, File No. 121 SUMMARY: PO 00000 Frm 00028 Fmt 4703 Sfmt 4703 0157’’ on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at https:// www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals’ home contact information from comments before placing them on the Commission Web site. Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone’s Social Security number, date of birth, driver’s license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any ‘‘[t]rade secret or any commercial or financial information which * * * is privileged or confidential,’’ as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).1 Your comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest. Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https:// ftcpublic.commentworks.com/ftc/ uhsascendconsent/ by following the instructions on the web-based form. If this Notice appears at https:// www.regulations.gov/#!home, you also 1 In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c). E:\FR\FM\12OCN1.SGM 12OCN1 Federal Register / Vol. 77, No. 198 / Friday, October 12, 2012 / Notices may file a comment through that Web site. If you file your comment on paper, write ‘‘Universal Health Services, File No. 121 0157’’ on your comment and on the envelope, and mail or deliver it to the following address: Federal Trade Commission, Office of the Secretary, Room H–113 (Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your paper comment to the Commission by courier or overnight service. Visit the Commission Web site at https://www.ftc.gov to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before November 7, 2012. You can find more information, including routine uses permitted by the Privacy Act, in the Commission’s privacy policy, at https://www.ftc.gov/ftc/privacy.htm. Analysis of Agreement Containing Consent Order To Aid Public Comment wreier-aviles on DSK5TPTVN1PROD with NOTICES I. Introduction and Background The Federal Trade Commission (‘‘Commission’’) has accepted for public comment, subject to final approval, an Agreement Containing Consent Orders (‘‘Consent Agreement’’) from Alan B. Miller and Universal Health Services, Inc. (collectively, ‘‘UHS’’). The purpose of the proposed Consent Agreement is to remedy the anticompetitive effects that otherwise would result from the merger of UHS with Ascend Health Corporation (‘‘Ascend’’). Under the terms of the proposed Consent Agreement, UHS is required to divest, within six months after the Decision and Order is issued, its Peak Behavioral Health Services facility (‘‘Peak’’), and all relevant assets and real property in the local market encompassing El Paso, Texas and its suburb, Santa Teresa, New Mexico (‘‘El Paso/Santa Teresa’’), to an acquirer that receives the approval of the Commission. UHS will acquire University Behavioral Health of El Paso, the Ascend facility, when the merger closes. To ensure that the divested assets attract a buyer that can adequately compete with UHS postdivestiture, the Consent Agreement requires a second UHS hospital, Mesilla Valley Hospital (‘‘Mesilla Valley’’), located in Las Cruces, New Mexico, to be divested if the original divestiture assets are not sold to an approved buyer within the six-month timeframe. UHS and Ascend have also agreed to hold the VerDate Mar<15>2010 13:59 Oct 11, 2012 Jkt 229001 to-be-divested assets separate, and to maintain the economic viability, marketability, and competitiveness of both the Peak and Mesilla Valley assets until the potential acquirer is approved by the Commission and the divestiture is complete. The proposed Consent Agreement has been placed on the public record for thirty days to solicit comments from interested persons. Comments received during this period will become part of the public record. After thirty days, the Commission again will review the proposed Consent Agreement and comments received, and decide whether it should withdraw the Consent Agreement, modify the Consent Agreement, or make it final. On June 3, 2012, UHS agreed to acquire Ascend in a transaction valued at approximately $517 million. The Commission’s complaint alleges that the proposed acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, by removing an actual, direct, and substantial competitor from one local market for acute inpatient psychiatric services. The proposed Consent Agreement would remedy the alleged violations by requiring a complete divestiture in the affected market. The divestiture will replace the competition that otherwise would be lost in the El Paso/Santa Teresa market as a result of the proposed acquisition. II. The Parties UHS, headquartered in King of Prussia, Pennsylvania, owns or operates 25 general acute care hospitals and 198 behavioral health facilities located in 36 states, Washington, DC, Puerto Rico, and the U.S. Virgin Islands. It is one of the largest hospital management companies in the United States, with 2011 revenues totaling approximately $7.5 billion. In 2011, UHS’s 198 behavioral health facilities generated approximately $3.4 billion in revenue (25% of total revenues) from nearly 19,000 licensed beds and over 5 million patient days. The top revenue sources for its behavioral health centers are commercial payors (38% of 2011 net revenue), Medicaid (24%), and Medicare (17%). In November 2010, UHS completed its acquisition of Psychiatric Solutions, Inc., which had operated the nation’s largest network of freestanding inpatient behavioral health facilities, subject to an FTC consent order that required UHS to divest facilities in Nevada, Delaware, and Puerto Rico. PO 00000 Frm 00029 Fmt 4703 Sfmt 4703 62239 Ascend, headquartered in New York, New York, owns or operates nine behavioral health facilities located in Arizona, Oregon, Texas, Utah, and Washington, including seven acute inpatient psychiatric hospitals, a substance abuse residential treatment center, and an addiction treatment center. III. Acute Inpatient Psychiatric Services UHS’s proposed acquisition of Ascend poses substantial antitrust concerns in the relevant product market of acute inpatient psychiatric services provided to commercially insured patients. Acute inpatient psychiatric services are those provided for the diagnosis, treatment, and care of patients deemed to be a threat to themselves or others or unable to perform basic life functions, due to an acute psychiatric condition. Acute inpatient psychiatric care is distinct from other psychiatric services such as partial hospitalization, intensive outpatient programs, outpatient care, and residential treatment. Other, less intensive, psychiatric services are not substitutes for acute inpatient psychiatric services. The acute inpatient psychiatric services market is local in nature. Analysis of patient flow data and evidence gathered from market participants indicate that patients and their families prefer to find care as close to home as possible and to stay within the city where they live or work. Accordingly, most residents of El Paso and Santa Teresa obtain acute inpatient psychiatric services from providers located in El Paso or Santa Teresa. Health plans also have internal guidelines or regulatory ‘‘geo-access’’ standards requiring that services be made available within a certain, usually short, distance from their members. The acute inpatient psychiatric services market affected by the proposed acquisition is thus limited to the El Paso/Santa Teresa market. The proposed acquisition would lead to a virtual monopoly in the provision of acute inpatient psychiatric services provided to commercially insured patients in the El Paso/Santa Teresa market, which creates a strong presumption that the acquisition would create or enhance market power or facilitate its exercise. The presumption of anticompetitive harm is further supported by evidence of the close competition between the UHS- and Ascend-owned facilities that would be eliminated by the proposed merger. Consumers in El Paso/Santa Teresa have benefitted from the head-to-head competition in the form of lower health E:\FR\FM\12OCN1.SGM 12OCN1 62240 Federal Register / Vol. 77, No. 198 / Friday, October 12, 2012 / Notices wreier-aviles on DSK5TPTVN1PROD with NOTICES care costs, higher quality of care, and improved service offerings. Left unremedied, the proposed acquisition likely would cause anticompetitive harm by enabling UHS to profit by unilaterally raising the reimbursement rates negotiated with commercial health plans. These costs are ultimately borne by consumers in the form of higher premiums, co-pays, and other out-ofpocket costs. The loss of competition also reduces UHS?s incentive to improve quality and provide better service. New entry or expansion is unlikely to deter or counteract the anticompetitive effects of the proposed acquisition. While regulatory barriers to opening a new psychiatric facility or unit are lower in Texas and New Mexico than in other states (e.g., there are no Certificate of Need regulations in either state), local zoning regulations, Medicaid and Medicare certifications, and the need to develop strong relationships with local patient referral sources hinder the ability of firms to enter the market. Cuts to Medicaid funding may also affect the financial incentive of a provider to offer inpatient psychiatric services. Thus, it is unlikely that new entry or expansion sufficient to achieve a significant market impact will occur in a timely manner. IV. The Proposed Consent Agreement The proposed Consent Agreement wholly remedies the anticompetitive effects in the El Paso/Santa Teresa market by requiring UHS to divest Peak, located in Santa Teresa, New Mexico, and its associated operations and businesses within six months after issuance of the Decision and Order. The potential acquirer of Peak is subject to prior approval of the Commission. The Consent Agreement also provides that, if Peak is not sold to an approved acquirer within six months, a Divestiture Trustee will be appointed and empowered to divest both Peak and Mesilla Valley. The purpose of this provision is to address the uncertainty of whether Peak alone is sufficient to attract an acquirer that would compete as effectively as UHS competed prior to the merger. Until completion of the requisite divestiture(s), UHS is required to abide by the Order to Hold Separate and Maintain Assets, which includes a requirement that UHS hold Peak separate from its other businesses and facilities, and a requirement to take all actions necessary to maintain the economic viability, marketability, and competitiveness of the both the Peak and Mesilla Valley assets. The Consent Agreement also requires UHS to provide transitional services to the approved acquirer for one year, as needed to assist VerDate Mar<15>2010 13:59 Oct 11, 2012 Jkt 229001 the acquirer with operating the divested assets as a viable and ongoing business. In addition, the proposed order allows the Commission to appoint a Hold Separate Trustee to oversee UHS’s compliance with the Order to Hold Separate and Maintain Assets. Finally, the proposed order contains a ten-year prior notice requirement for acquisitions of acute inpatient psychiatric service providers in the local area, as well as compliance reporting requirements. The sole purpose of this analysis is to facilitate public comment on the Consent Agreement. This analysis does not constitute an official interpretation of the Consent Agreement or modify its terms in any way. By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2012–25140 Filed 10–11–12; 8:45 am] BILLING CODE 6750–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Disease Control and Prevention Disease, Disability, and Injury Prevention and Control Special Emphasis Panel: Notice of Charter Renewal This gives notice under the Federal Advisory Committee Act (Pub. L. 92– 463) of October 6, 1972, that Disease, Disability, and Injury Prevention and Control Special Emphasis Panel, Centers for Disease Control and Prevention, Department of Health and Human Services, has been renewed for a 2-year period through September 18, 2014. For information, contact John Kastenbauer, J.D., Designated Federal Officer, Disease, Disability, and Injury Prevention and Control Special Emphasis Panel, Centers for Disease Control and Prevention, Department of Health and Human Services, 1600 Clifton Road NE., Mailstop E11, Atlanta, Georgia 30333, telephone (770)488– 4778 or fax (770)488–4890. The Director, Management Analysis and Services Office, has been delegated the authority to sign Federal Register notices pertaining to announcements of meetings and other committee management activities, for both the Centers for Disease Control and Prevention and the Agency for Toxic Substances and Disease Registry. PO 00000 Frm 00030 Fmt 4703 Sfmt 4703 Dated: October 5, 2012. John Kastenbauer, Acting Director, Management Analysis and Services Office, Centers for Disease Control and Prevention. [FR Doc. 2012–25096 Filed 10–11–12; 8:45 am] BILLING CODE 4163–18–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Disease Control and Prevention Advisory Board on Radiation and Worker Health (ABRWH or Advisory Board), National Institute for Occupational Safety and Health (NIOSH) In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92–463), the Centers for Disease Control and Prevention announces the following meeting of the aforementioned committee: Time and Date: 11:00 a.m.–3:00 p.m., November 5, 2012. Place: Audio Conference Call via FTS Conferencing. The USA toll-free, dial-in number is 1–866–659–0537 and the pass code is 9933701. Status: Open to the public, but without a verbal public comment period. Written comment should be provided to the contact person below in advance of the meeting. Background: The Advisory Board was established under the Energy Employees Occupational Illness Compensation Program Act of 2000 to advise the President on a variety of policy and technical functions required to implement and effectively manage the new compensation program. Key functions of the Advisory Board include providing advice on the development of probability of causation guidelines, which have been promulgated by the Department of Health and Human Services (HHS) as a final rule; advice on methods of dose reconstruction, which have also been promulgated by HHS as a final rule; advice on the scientific validity and quality of dose estimation and reconstruction efforts being performed for purposes of the compensation program; and advice on petitions to add classes of workers to the Special Exposure Cohort (SEC). In December 2000, the President delegated responsibility for funding, staffing, and operating the Advisory Board to HHS, which subsequently delegated this authority to the CDC. NIOSH implements this responsibility for CDC. The charter was issued on August 3, 2001, renewed at appropriate E:\FR\FM\12OCN1.SGM 12OCN1

Agencies

[Federal Register Volume 77, Number 198 (Friday, October 12, 2012)]
[Notices]
[Pages 62238-62240]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25140]


=======================================================================
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FEDERAL TRADE COMMISSION

[File No. 121 0157]


Alan B. Miller and Universal Health Services; Analysis of 
Agreement Containing Consent Orders To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of Federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint and the terms of the consent order--embodied in the consent 
agreement--that would settle these allegations.

DATES: Comments must be received on or before November 7, 2012.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/uhsascendconsent/ online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Universal Health 
Services, File No. 121 0157''on your comment, and file your comment 
online at https://ftcpublic.commentworks.com/ftc/uhsascendconsent/, by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail or deliver your comment to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-113 
(Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Janelle Filson (202-326-2882), FTC, 
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for October 5, 2012), on the World Wide Web, at 
https://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from 
the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue NW., 
Washington, DC 20580, either in person or by calling (202) 326-2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before November 7, 
2012. Write ``Universal Health Services, File No. 121 0157'' on your 
comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at https://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which * * * is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
---------------------------------------------------------------------------

    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/uhsascendconsent/ by following the instructions on the web-based 
form. If this Notice appears at https://www.regulations.gov/#!home, you 
also

[[Page 62239]]

may file a comment through that Web site.
    If you file your comment on paper, write ``Universal Health 
Services, File No. 121 0157'' on your comment and on the envelope, and 
mail or deliver it to the following address: Federal Trade Commission, 
Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue 
NW., Washington, DC 20580. If possible, submit your paper comment to 
the Commission by courier or overnight service.
    Visit the Commission Web site at https://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before November 7, 2012. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at https://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

I. Introduction and Background

    The Federal Trade Commission (``Commission'') has accepted for 
public comment, subject to final approval, an Agreement Containing 
Consent Orders (``Consent Agreement'') from Alan B. Miller and 
Universal Health Services, Inc. (collectively, ``UHS''). The purpose of 
the proposed Consent Agreement is to remedy the anticompetitive effects 
that otherwise would result from the merger of UHS with Ascend Health 
Corporation (``Ascend''). Under the terms of the proposed Consent 
Agreement, UHS is required to divest, within six months after the 
Decision and Order is issued, its Peak Behavioral Health Services 
facility (``Peak''), and all relevant assets and real property in the 
local market encompassing El Paso, Texas and its suburb, Santa Teresa, 
New Mexico (``El Paso/Santa Teresa''), to an acquirer that receives the 
approval of the Commission. UHS will acquire University Behavioral 
Health of El Paso, the Ascend facility, when the merger closes. To 
ensure that the divested assets attract a buyer that can adequately 
compete with UHS post-divestiture, the Consent Agreement requires a 
second UHS hospital, Mesilla Valley Hospital (``Mesilla Valley''), 
located in Las Cruces, New Mexico, to be divested if the original 
divestiture assets are not sold to an approved buyer within the six-
month timeframe. UHS and Ascend have also agreed to hold the to-be-
divested assets separate, and to maintain the economic viability, 
marketability, and competitiveness of both the Peak and Mesilla Valley 
assets until the potential acquirer is approved by the Commission and 
the divestiture is complete.
    The proposed Consent Agreement has been placed on the public record 
for thirty days to solicit comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty days, the Commission again will review the proposed 
Consent Agreement and comments received, and decide whether it should 
withdraw the Consent Agreement, modify the Consent Agreement, or make 
it final.
    On June 3, 2012, UHS agreed to acquire Ascend in a transaction 
valued at approximately $517 million. The Commission's complaint 
alleges that the proposed acquisition, if consummated, would violate 
Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 
of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, by 
removing an actual, direct, and substantial competitor from one local 
market for acute inpatient psychiatric services. The proposed Consent 
Agreement would remedy the alleged violations by requiring a complete 
divestiture in the affected market. The divestiture will replace the 
competition that otherwise would be lost in the El Paso/Santa Teresa 
market as a result of the proposed acquisition.

II. The Parties

    UHS, headquartered in King of Prussia, Pennsylvania, owns or 
operates 25 general acute care hospitals and 198 behavioral health 
facilities located in 36 states, Washington, DC, Puerto Rico, and the 
U.S. Virgin Islands. It is one of the largest hospital management 
companies in the United States, with 2011 revenues totaling 
approximately $7.5 billion. In 2011, UHS's 198 behavioral health 
facilities generated approximately $3.4 billion in revenue (25% of 
total revenues) from nearly 19,000 licensed beds and over 5 million 
patient days. The top revenue sources for its behavioral health centers 
are commercial payors (38% of 2011 net revenue), Medicaid (24%), and 
Medicare (17%). In November 2010, UHS completed its acquisition of 
Psychiatric Solutions, Inc., which had operated the nation's largest 
network of freestanding inpatient behavioral health facilities, subject 
to an FTC consent order that required UHS to divest facilities in 
Nevada, Delaware, and Puerto Rico.
    Ascend, headquartered in New York, New York, owns or operates nine 
behavioral health facilities located in Arizona, Oregon, Texas, Utah, 
and Washington, including seven acute inpatient psychiatric hospitals, 
a substance abuse residential treatment center, and an addiction 
treatment center.

III. Acute Inpatient Psychiatric Services

    UHS's proposed acquisition of Ascend poses substantial antitrust 
concerns in the relevant product market of acute inpatient psychiatric 
services provided to commercially insured patients. Acute inpatient 
psychiatric services are those provided for the diagnosis, treatment, 
and care of patients deemed to be a threat to themselves or others or 
unable to perform basic life functions, due to an acute psychiatric 
condition. Acute inpatient psychiatric care is distinct from other 
psychiatric services such as partial hospitalization, intensive 
outpatient programs, outpatient care, and residential treatment. Other, 
less intensive, psychiatric services are not substitutes for acute 
inpatient psychiatric services.
    The acute inpatient psychiatric services market is local in nature. 
Analysis of patient flow data and evidence gathered from market 
participants indicate that patients and their families prefer to find 
care as close to home as possible and to stay within the city where 
they live or work. Accordingly, most residents of El Paso and Santa 
Teresa obtain acute inpatient psychiatric services from providers 
located in El Paso or Santa Teresa. Health plans also have internal 
guidelines or regulatory ``geo-access'' standards requiring that 
services be made available within a certain, usually short, distance 
from their members. The acute inpatient psychiatric services market 
affected by the proposed acquisition is thus limited to the El Paso/
Santa Teresa market.
    The proposed acquisition would lead to a virtual monopoly in the 
provision of acute inpatient psychiatric services provided to 
commercially insured patients in the El Paso/Santa Teresa market, which 
creates a strong presumption that the acquisition would create or 
enhance market power or facilitate its exercise. The presumption of 
anticompetitive harm is further supported by evidence of the close 
competition between the UHS- and Ascend-owned facilities that would be 
eliminated by the proposed merger. Consumers in El Paso/Santa Teresa 
have benefitted from the head-to-head competition in the form of lower 
health

[[Page 62240]]

care costs, higher quality of care, and improved service offerings. 
Left unremedied, the proposed acquisition likely would cause 
anticompetitive harm by enabling UHS to profit by unilaterally raising 
the reimbursement rates negotiated with commercial health plans. These 
costs are ultimately borne by consumers in the form of higher premiums, 
co-pays, and other out-of-pocket costs. The loss of competition also 
reduces UHS?s incentive to improve quality and provide better service.
    New entry or expansion is unlikely to deter or counteract the 
anticompetitive effects of the proposed acquisition. While regulatory 
barriers to opening a new psychiatric facility or unit are lower in 
Texas and New Mexico than in other states (e.g., there are no 
Certificate of Need regulations in either state), local zoning 
regulations, Medicaid and Medicare certifications, and the need to 
develop strong relationships with local patient referral sources hinder 
the ability of firms to enter the market. Cuts to Medicaid funding may 
also affect the financial incentive of a provider to offer inpatient 
psychiatric services. Thus, it is unlikely that new entry or expansion 
sufficient to achieve a significant market impact will occur in a 
timely manner.

IV. The Proposed Consent Agreement

    The proposed Consent Agreement wholly remedies the anticompetitive 
effects in the El Paso/Santa Teresa market by requiring UHS to divest 
Peak, located in Santa Teresa, New Mexico, and its associated 
operations and businesses within six months after issuance of the 
Decision and Order. The potential acquirer of Peak is subject to prior 
approval of the Commission. The Consent Agreement also provides that, 
if Peak is not sold to an approved acquirer within six months, a 
Divestiture Trustee will be appointed and empowered to divest both Peak 
and Mesilla Valley. The purpose of this provision is to address the 
uncertainty of whether Peak alone is sufficient to attract an acquirer 
that would compete as effectively as UHS competed prior to the merger.
    Until completion of the requisite divestiture(s), UHS is required 
to abide by the Order to Hold Separate and Maintain Assets, which 
includes a requirement that UHS hold Peak separate from its other 
businesses and facilities, and a requirement to take all actions 
necessary to maintain the economic viability, marketability, and 
competitiveness of the both the Peak and Mesilla Valley assets. The 
Consent Agreement also requires UHS to provide transitional services to 
the approved acquirer for one year, as needed to assist the acquirer 
with operating the divested assets as a viable and ongoing business. In 
addition, the proposed order allows the Commission to appoint a Hold 
Separate Trustee to oversee UHS's compliance with the Order to Hold 
Separate and Maintain Assets. Finally, the proposed order contains a 
ten-year prior notice requirement for acquisitions of acute inpatient 
psychiatric service providers in the local area, as well as compliance 
reporting requirements.
    The sole purpose of this analysis is to facilitate public comment 
on the Consent Agreement. This analysis does not constitute an official 
interpretation of the Consent Agreement or modify its terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012-25140 Filed 10-11-12; 8:45 am]
BILLING CODE 6750-01-P
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