Indiana Approves Union Hospital’s Acquisition of Terre Haute Regional Hospital

Overview of the Acquisition

Indiana’s health department has granted approval for Union Hospital to acquire Terre Haute Regional Hospital, despite opposition from antitrust regulators during both the Biden and Trump administrations. Governor Mike Braun announced the approval on Sunday, following the state regulators’ endorsement of Union’s application for a Certificate of Public Advantage (COPA). This marks the first instance of COPA approval under Indiana law, which facilitates potentially anticompetitive hospital mergers. Governor Braun stated that this merger, pursued by Union for several years, aims to reduce healthcare costs and improve accessibility for residents in Indiana.

Concerns Raised by Antitrust Experts

Despite the state’s approval, the Federal Trade Commission (FTC) and various independent antitrust experts have expressed concerns that the merger could lead to increased costs, diminished access for patients, and reduced wage growth for hospital employees.

Background of the Acquisition Effort

Union Health’s Attempt to Acquire Terre Haute Regional

Union Health, the parent company of Union Hospital, has been seeking to acquire Terre Haute Regional from HCA Healthcare since at least 2021. The company began lobbying for Indiana’s COPA law during this period. In September 2023, Union initially submitted a formal application for the COPA but later withdrew it due to opposition from federal regulators. The organization refiled its request to merge the 341-bed Union Hospital with the 278-bed Terre Haute Regional in early 2025, yet critics argue that the revised application faced similar issues as the first.

Opposition from Various Stakeholders

The merger has faced opposition from patient advocates, health policy experts, the state’s attorney general, and the FTC. Nevertheless, the Indiana Department of Health concluded that the benefits of the merger outweigh its potential drawbacks. Governor Braun remarked that the merger would lead to lower prices and increased healthcare services for residents of Terre Haute and Vigo County, attributing this to the stringent operating conditions accepted by Union.

Understanding COPAs and Their Implications

What is a Certificate of Public Advantage?

Indiana is among 19 states that permit COPAs, which allow hospital mergers to bypass federal antitrust laws in favor of stricter state oversight. These certificates can approve hospital mergers that may significantly reduce competition if the hospitals demonstrate public benefit.

FTC’s Findings and Concerns

In March, the FTC warned that the anticipated loss of competition from the Union-Terre Haute merger could result in higher healthcare prices and reduced services for Indiana patients. The agency highlighted that a merged Union-Terre Haute system could dominate the market for inpatient hospital services in Vigo County.

State Regulators’ Defense of the Approval

Regulatory Assurance and Commitments

Despite acknowledging that the merger could create a monopoly for inpatient services in Vigo County, state regulators expressed confidence in the commitments made by Union and Terre Haute as part of the COPA. These include price caps and ensuring service preservation. The state indicated that these commitments would mitigate potential negative impacts on public health outcomes.

Challenges in Enforcing Commitments

However, the FTC noted the difficulties in enforcing these commitments post-merger. Once competition is diminished, regulatory power may weaken, and hospitals may pass any fines onto patients. Experts, including Zack Cooper from Yale University, pointed out that the lack of competition could lead to significant price increases after the COPA expires in five years.

Statements from Union Health

Union’s Perspective on the Merger

In a statement following the approval, Union expressed gratitude to Indiana for its support, asserting that the merger would ensure the continuation of medical care within the community. Union Health CEO Steve Holman emphasized that this decision aligns with the best interests of the community, securing healthcare access for future generations.

Federal Perspective on COPAs

Concerns Over COPAs’ Impact on Healthcare

Federal antitrust regulators have historically been skeptical of COPAs, citing evidence that these certificates often lead to increased inpatient prices and declining care quality. For instance, the Ballad Health system in Tennessee and Virginia saw a significant rise in emergency room wait times after receiving a COPA in 2018. Similarly, Mission Health in North Carolina experienced a 20% increase in commercial inpatient prices while under a COPA, with further increases following the repeal of the certificate.