In recent months, the antitrust enforcers have been surprisingly silent with respect to health system and hospital transactions. But that silence ended last week, when the Federal Trade Commission (“FTC”) issued a statement by Chairman Andrew Ferguson, joined by Commissioner Mark Meador, regarding Fairfield Medical Center’s sale to Adena Health (the “Statement”). In the Statement, the FTC makes clear that it is continuing to heavily scrutinize health system and hospital mergers and the “shop” process for such deals, particularly when the acquired hospital or health system is suffering financial distress.
Background on the Sale of Fairfield Medical Center and Summary of the Statement
Fairfield Medical Center (“FMC”) is a hospital system based in southeastern Ohio. The statement revealed that, prior to FMC’s sale to Adena, FMC had considered potentially selling to OhioHealth, a 16-hospital health system that earlier this year was sued by, and reached a settlement with, the Department of Justice related to its allegedly anticompetitive contracting practices.[1] During its investigation of the proposed OhioHealth transaction, the FTC determined the deal would have resulted in OhioHealth having a high share of inpatient hospital admissions and threatened to substantially reduce competition in and around Fairfield County in Ohio. In light of these issues, and based on FTC’s engagement, FMC opted to sell to Adena Health—a transaction that did not raise any of the competition concerns identified by the FTC.
In the Statement, the FTC specifically emphasized the significance the agency places on the “shop” process in cases where the parties argue the transaction is necessary due to the target firm’s financial distress. The FTC explained that, while hospitals understandably may need to be acquired in such cases, financial struggles do not create a “blank check for mergers that would substantially reduce competition.”[2] To the contrary, the Statement repeatedly makes clear that an adequate shop is a “necessary condition” to raising a failing firm defense and that anticompetitive acquisitions will be permitted on the basis that “they are superior to closures of hospitals only if there is no alternative transaction that would preserve competition or present fewer or less severe competition concerns.”[3]
In performing this analysis, the FTC will review closely the “process that a financially distressed hospital followed to identify potential buyers,” including whether the hospital made unsuccessful, good-faith efforts to obtain a reasonable alternative offer that poses less of a risk to competition than the proposed merger.[4] While emphasizing that examination of the shop process is fact-intensive, the FTC pointed to several facts the Commission will look for in such cases:
- Whether the search solicited interest from the full set of potential buyers;
- Whether potential buyers were given sufficient time to evaluate a potential transaction;
- Whether potential buyers received sufficient and equal access to information necessary to evaluate a potential transaction;
- Whether the seller engaged with interested potential buyers in good faith; and
- Whether the seller appropriately considered offers from buyers that did not present competitive concerns.[5]
The Statement makes clear the importance of documentary evidence, stressing that distressed firms and hospitals should document the shop process carefully. In addition, the FTC threatens that, if presented with an inadequate shop process in such deals, the FTC may demand that the selling firm “re-shop itself” using a sufficient process.[6]
Key Takeaways and Trends
The Statement confirms the longstanding approach of the FTC: financial distress alone will not allow hospitals to clear their deals if they otherwise cause competitive concerns. Hospitals thus should enter into, and document, an adequate shop process when selling to another health system.
In addition, in the press release accompanying the Statement, FTC Bureau of Competition Director Daniel Guarnera referenced the FTC’s commitment to preventing antitrust harm when “reviewing deals involving hospitals that serve rural communities.”[7] This statement echoes prior statements made by Chairman Ferguson, such as his letters to health systems about non-competes, making clear that this FTC is particularly focused on healthcare enforcement impacting rural areas.
Last, the Statement extensively mentions and praises the Ohio Attorney General’s Office for their collaboration and work on the matter, reinforcing the continued involvement and importance of state-level antitrust enforcers in the current enforcement climate (particularly in the healthcare industry).
FOOTNOTES
[1] See White House Report and Department of Justice OhioHealth Settlement Underscore Continued Focus on Healthcare Industry and Providers’ Contracting Practices (June 25, 2026), available at https://www.sheppard.com/insights/blogs/white-house-report-and-department-of-justice-ohiohealth-settlement-underscore-continued-focus-on-healthcare-industry-and-providers-contracting-practices.
[2] Statement of Chairman Andrew N. Ferguson Joined by Commissioner Mark R. Meador Regarding Fairfield Medical Center’s Sale to Adena Health (Sept. 2, 2026), available at https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-meador-adena-fmc-statement.pdf.
[3] Statement at 2-3 (emphasis in original).
[4] Statement at 2 (emphasis in original).
[5] Statement at 2-3.
[6] Statement at 3.
[7] Statement Regarding Fairfield Medical Center’s Sale to Adena (Sept. 2, 2026), available at https://www.ftc.gov/news-events/news/press-releases/2026/09/statement-regarding-fairfield-medical-centers-sale-adena-health.