The Dive: Antitrust the Process

The Federal Trade Commission is trying to block Novant Health’s bid to buy two hospitals in the Charlotte suburbs. In a legal complaint, the FTC says Novant’s attempted $320 million deal would kill competition in the Eastern Lake Norman area. Novant says that argument is flawed and will vigorously defend itself this summer. 

Last year, the Department of Justice and the FTC dropped decades-old guidance on policies that permitted antitrust “safety zones” in most health care mergers and acquisitions. As a result, industry analysts see regulators adopting a more hostile approach: The switch was like “lobb[ing] a hand grenade” into the health care market, as one consulting firm put it. 

Heightened federal scrutiny of health care deals arrives as the industry has rapidly consolidated–a trend that’s long concerned scholars, regulators, and the public. Research has shown that consolidation can lead to increased costs, and higher costs don’t always equate with better care. 

The government’s complaint against Novant references its 2021 acquisition of New Hanover Regional Medical Center, which closed three years ago today. Thereafter, Novant continued its “campaign of consolidation,” the complaint states. Last fall, Novant announced plans to buy three more hospitals in South Carolina. 

Compared to the Eastern Lake Norman deal, the Wilmington purchase was a larger transaction and involved a similar population base. But the $1.5 billion New Hanover sale underwent no federal scrutiny. As a public asset, it was exempt from federal reporting requirements, according to a Novant spokesperson. An FTC spokesperson declined to comment. 

State Attorney General Josh Stein signed off on the New Hanover deal, saying at the time that it passed antitrust muster. A spokesperson for Stein said his role in this process is restricted. Because the Eastern Lake Norman hospitals don’t involve nonprofit assets (unlike New Hanover), the spokesperson said Stein has limited independent pre-transaction oversight tools. 

The Eastern Lake Norman deal would mean the area would go from four health care systems to three, “with two of those being the largest health care systems in the state,” Stein’s spokesperson said.

Last year, Stein supported legislation that would have increased his oversight of these transactions, but that bill died in committee. An impetus for the measure was the New Hanover purchase as well as issues that have arisen from the HCA Healthcare deal in Asheville, a transaction Stein approved in 2019. He sued the hospital in December for failing to live up to promises.

Stein, who is running for governor, said he supports federal intervention in the Eastern Lake Norman deal and is assisting in the investigation. 

The year Novant acquired Wilmington’s hospital, the region had the second-most concentrated metropolitan heath care market in the nation, according to monopoly scoring criteria regulators use, meaning that there’s little competition here. Competition is generally higher in densely populated areas.

Before purchasing New Hanover Regional Medical Center, the county’s only hospital, Novant already owned the largest of two hospitals in Brunswick County, and in December, Stein approved its deal to purchase Pender County’s only hospital.

In the Eastern Lake Norman complaint, the FTC said an acquisition is presumptively illegal if it creates a combined firm with a market share greater than 30 percent. 

It’s not yet clear what effect Novant’s acquisition of New Hanover Regional Medical Center has had on its monopoly score. But it’s hard to imagine the environment has gotten more competitive. 

– Johanna F. Still

Catch up on an audio conversation on last week’s edition of The Dive here, or contact us with story ideas and feedback at wilmington@theassemblync.com.

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For Whom the Bridge Tolls

Wilmington Urban Area Metropolitan Planning Organization board members had a spirited debate Wednesday before voting 8-5 to keep a toll option on the table for funding scoring purposes to replace the Cape Fear Memorial Bridge. Read more from WHQR’s coverage of the thorny issue.

In other bridge news, a parody Cape Fear Memorial Bridge Facebook page created last week already has more than 3,200 followers. Here’s our favorite joke so far: 

“Treat yourself like the Cape Fear Memorial Bridge. Always keep working on yourself, no matter how inconvenient it is for everyone else.”

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Invisible Ink

Last week, The Pender-Topsail Post & Voice dropped a bombshell story. According to court documents, Joe Cina, a candidate for the Pender County Board of Commissioners, lied to investigators about an affair he had with a fellow deputy at the New Hanover County Sheriff’s Office to “save his marriage.” 

Cina resigned as a lieutenant in 2016, after 12 years with the office. But his misconduct was serious enough to draw the attention of District Attorney Ben David’s office. David wrote in a confidential document that Cina’s “multiple untruthful statements” warranted review by a so-called Giglio committee, named for the 1972 U.S. Supreme Court case that requires defendants be notified if an officer testifying against them has questionable credibility. David’s office maintains a confidential list of officers with Giglio letters.

In most cases, Cina’s personnel record would remain confidential. It didn’t come out when Cina ran unsuccessfully for Pender County Sheriff in 2018.

But Cina applied for a private investigator’s license several years later, and the North Carolina Private Protective Services Board rejected him due to a“lack of good moral character and temperate habits,” based on confidential records of his previous employment.

Cina appealed to the Office of Administrative Hearings, which among other things referees disputes over state decisions. While the agency ruled in his favor in 2019 and he later went on to obtain the private investigator’s license, it meant his personnel records and Giglio status became public.

WHQR fleshed out more details on the story earlier this week, and talked to both Post & Voice editor Andy Pettigrew and Cina.

Cina accused the newspaper of having a vendetta against him, calling the article part of “a smear campaign.” And he noted that he had gone on to work both as a private investigator and a probation parole officer for the state–evidence that his past misconduct “does not in any way hamper or keep me from being a county commissioner.”

Voters will decide in March whether Cina’s past is disqualifying. 

I think back to the summer of 2020 and the calls for police reform that included things like civilian review boards for law enforcement. David and others told me at the time that his office’s Giglio review committee was that oversight board. But because it takes place in secret, David was in effect telling us to trust without the ability to verify.

Almost four years later, I’m still left wondering if that’s nearly enough.

–Benjamin Schachtman

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Assembly Live

On Friday, The Assembly will host a virtual Q&A event with reporter Tim Funk to discuss his story on candidate and baptist pastor, Mark Harris.

The event begins at 1 p.m. Register online here.

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Around the Region

Fall From Grace: Former New Hanover County Chair Julia Olson-Boseman has been officially disbarred, WHQR reports. 

Smells Like PFAS: The Guardian commissioned its own air testing of the Chemours plant, using more extensive testing methods than the state, and found more “forever chemicals” than previously known.

‘A Blood Sport’: A Democratic New Hanover County school board candidate ended her campaign ahead of the primary, WHQR reports, citing concerns about the safety of her family. Port City Daily reports the breakdown involved the candidate’s pro-Palestinian social media post.

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Around the State

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