Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Florida sues to stop combination of two largest outpatient surgery center operators, (Nov 3, 2014)

By Linda O’Brien, J.D., LL.M.

The proposed merger of two of the largest operators of ambulatory surgery centers, Symbion and Surgery Partners, would substantially lessen competition for providing ambulatory surgery services to commercially insured patients in southwest Florida, according to a complaint filed in the federal district court of Tallahassee by Florida Attorney General Pamela Bondi (The State of Florida v. H.I.G. Bayside Debt & LBO Fund II, L.P., October 31, 2014).

Surgery Partners, a subsidiary of H.I.G. Bayside Debt & LBO Fund II, operates 47 single and multi-specialty ambulatory surgery centers across the United States. Symbion, a subsidiary of Crestview Partners, operates 44 ambulatory surgery centers in 21 states, as well as several short-stay surgical hospitals. Ambulatory surgery centers (ASCs) are freestanding clinical facilities that provide outpatient surgery services.

The complaint alleges that the market for the provision of outpatient surgical services to commercial health plans and commercially-insured patients in southwestern Florida is moderately concentrated. Surgery Partners and Symbion are two of the three largest providers of outpatient surgical services to commercially-insured patients in southwestern Volusia County and includes the cities of Orange City and Deltona, Florida. Additionally, the proposed acquisition of Symbion by Surgery Partners would combine ownership of the only two multi-specialty ASCs in Orange City, Florida.

Generally, patients prefer to obtain outpatient surgical services close to where they live or work. Thus, patients are unlikely to seek outpatient surgical services from more distant providers, even in response to a small but significant increase in price, the state claimed.

According to the complaint, the merger, if consummated, would substantially lessen competition for the provision of outpatient surgical services by eliminating direct and substantial competition between Surgery Partners and Symbion and increasing the likelihood that Surgery Partners will exercise market power. Entry into the market by competitors would not be sufficient to deter the likely anticompetitive effects of the merger, since significant entry barriers include (1) the time and costs associated with constructing an ASC; (2) regulatory and licensing requirements; and (3) the need to recruit physicians to staff an ASC.

The state asserts claims for violations of the Florida Antitrust Act, seeking declaratory and injunctive relief, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 4:14-cv-00583-RH-CAS.

Attorneys: Patricia A. Conners and Lizabeth A. Brady, Office of the Attorney General, for the State of Florida.

Companies: H.I.G. Bayside Debt & LBO Fund II, L.P.; Crestview Partners, L.P.

News: Antitrust FloridaNews