Legislators ask state Attorney General to investigate GHS-Palmetto Health deal

Liv Osby | The Greenville News

Show Caption Hide Caption GHS, Palmetto Health Affiliate Greenville Health System is joining forces with Palmetto Health in Columbia, creating the largest health system in South Carolina, officials said Thursday.

Members of Greenville County’s Legislative Delegation are asking the state Attorney General to investigate Greenville Health System’s affiliation with Palmetto Health.

The two hospitals announced the partnership on June 15, saying it would create the largest health system in the state, with 1.2 million patients a year and $3.9 billion in annual net revenue.

In a letter to Attorney General Alan Wilson, signed by Reps. Garry Smith, Rita Allison, Mike Burns, William Chumley, Dwight Loftis, Leola Robinson-Simpson, and Tommy Stringer, the legislators say they have concerns about the "anti-competitive nature" of the deal.

“Over the past several years, GHS has been expanding horizontally, vertically and geographically throughout a six-county region, such that it is now by far the dominant hospital and health care system in the Upstate,” they wrote.

“Depending upon the specific geographic area examined, GHS now controls between 75 percent and 100 percent of the market share,” they continued. “It has acquired county hospitals, a 300-employee cancer treatment center, numerous physician groups and clinics, and a variety of other medical and non-medical organizations throughout that six-county region … we believe that as Attorney General, you should be investigating it for systemic and continual violations of the South Carolina antitrust laws.”

GHS is aware of the letter, spokeswoman Sandy Dees said, noting the June 6 request predates the announcement of the proposed affiliation with Palmetto Health.

Smith said the letter was crafted prior to the GHS announcement because they’d heard rumors about more consolidation.

Dees said the affiliation requires an extensive filing with the Federal Trade Commission, which will review its impact on competition.

"We are confident that the FTC will find that the affiliation is not anti-competitive and offers significant cost efficiencies, which will be of benefit to the consumers and markets in general," she said.

But the legislators' letter said that lack of competition is the “single biggest cause of skyrocketing health care costs” and that GHS is the primary reason for that lack of competition in the Upstate.

“Now, this is not just an Upstate issue, it’s almost half the state of South Carolina,” Smith told The Greenville News. “This is unfair competition. There are certain places in the Upstate where there is not any competition at all.”

Smith said that as soon as GHS buys medical practices, prices and fees go up, he said.

“That’s a problem for consumers in the Upstate, and as a result of the partnership with Palmetto Health, a concern for almost half the state,” he said. “When the Attorney General looks at this information and sees the problem that has been created by this lack of competition, I think there should be action to protect the citizens who are getting gouged by this system.”

Remedies could include a prohibition on future acquisitions, divestiture of existing holdings, limits on new joint ventures, and the appointment of a monitor to ensure future compliance with state antitrust laws, the letter said.

Dees said that many of the same legislators last year asked the FTC to investigate GHS and its leasing of facilities to a not-for-profit entity under its new governance structure as antitrust violations.

"The FTC looked into the request and issued a notice that it was not taking any action and its investigation was closed," she said.

"These are also the same members of the delegation who have on numerous occasions tried to block the efforts of GHS to improve care in our community," she added. "They unsuccessfully sought to have Gov. Haley refuse to certify a public hearing held to maintain the tax-exempt status of bonds issued by GHS."

That would have cost GHS more than $167 million in additional interest, Dees said, adding that Haley refused.

They also asked the state Legislative Audit Council to investigate GHS, which was refused, and voted against GHS board nominees, she said. And they asked the state Supreme Court to enjoin the leasing of the GHS facilities, which was unsuccessful.

In addition, she said, they introduced a budget proviso that would have closed GHS hospitals. The measure was voted down 79 to 8, she said.

Calling GHS a “behemoth" that is "completely out of control,” Smith said the legislators have notified the Federal Trade Commission as well that they’re seeking Attorney General action on the matter, saying they should be very concerned.

The Attorney General’s office hadn’t received the letter as of yesterday, a spokeswoman said.