The FTC announced a settlement to the challenge of St. Cloud, Minn.-based CentraCare Health's acquisition of St. Cloud Medical Group, a 40-physician practice, according to a Law 360 report.
Here are five things to know:
1. The transaction was too small for reporting under the Hart-Scott-Rodino Act, falling below the HSR Act's $78.2 million threshold, but the FTC decided to challenge it anyway. The settlement is based on CentraCare Health providing financial assistance to "potential new entrants" and the practice's weak finances at the time of the transaction.
2. The Minnesota Office of the Attorney General had concerns over the transaction due to the size of both organizations; the combination brings together the two biggest primary care providers in St. Cloud. Post-acquisition, CentraCare Health would have more than 80 percent market share, according to the report.
3. CentraCare promised to "provide financial payments to incentivize the expansion of competition after the acquisition," according to the report. The settlement also suspended the noncompetes for around 14 physicians and gave $100,000 in "departure payments" for five physicians who left the health system for other medical practice groups.
4. St. Cloud Medical Group was a failing practice prior to the acquisition, which allowed more regulators to accept the transaction, according to the report, even though the practice didn't meet the "failing firm" criteria, according to a statement from the FTC commissioner and Minnesota's AG.
5. The challenge of nonreportable transactions is becoming more common, according to the report. The article's author recommended organizations involved in even small transactions notify the government enforcers of acquisitions and develop a plan for "reasonable investigation" as well as showing pro-competitive benefits of the acquisition.