Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA proposed merger of Vigo County’s only two hospitals seemed likely to Sen. Ed Charbonneau when the Indiana Department of Health was considering the first merger application for Union Hospital and Terre Haute Regional Hospital.
Charbonneau, a key architect of a 2021 law that allowed the state to oversee the merger application process, said he changed his mind on the merger’s certainty when he saw overwhelming opposition reflected in public comments submitted to the health department.
“I certainly wasn’t expecting 342 nos and 52 yeses,” Charbonneau, R-Valparaiso, said, referring to comments submitted in opposition or in favor of the merger.
The merger is now being reviewed for a second time by the state’s health department, but it will be the last merger considered under the certificate of public advantage process established by Charbonneau’s law.
Frustrated with the how COPA process worked in practice, Charbonneau reversed course and sponsored Senate Enrolled Act 119, signed into law by Gov. Mike Braun earlier this year, which prohibits any further submissions of an application for a certificate of public advantage.
But the Terre Haute merger application is still viable and a decision is expected soon.
Lisa Welch, a Indiana Department of Health spokesperson, told The Indiana Lawyer the public comment period is now closed, and 437 public comments were submitted.
Welch said the health department will release its decision in the next few weeks.
While both hospitals, as well as the Indiana Hospital Association, have reiterated their support and stressed the need to merge in recent months, the consolidation has drawn opposition again from several different corners.
Merger opposition
Attorney General Todd Rokita is among those who have expressed their public opposition to the proposed merger.
Rokita told the health department in an April 17 letter that health care costs and health outcomes are worse in Indiana than they are in many states across the nation.
“This is due, in part, to the consolidation of healthcare providers and insurers that causes soaring healthcare costs, which is negatively impacting Hoosiers’ livelihood, families, and overall well-being,” Rokita said in the letter.
Rokita pointed out that in 2021, the Indiana General Assembly passed the state’s COPA statute to allow certain health care entities to merge with antitrust immunity.
He said the condition was that the health department must find that the merger will “benefit the population’s health outcomes, healthcare access, and quality of care” in excess of any detriment felt by reduced competition.
The attorney general argued that no such benefits would materialize from this proposed merger, adding that it would “lead to the monopolization of Terre Haute hospital systems that (would) be unchecked in raising healthcare costs, stifling innovation, suppressing wages, and reducing access to care for the citizens of Terre Haute and the surrounding community.”
Clarke Edwards, acting director of the Federal Trade Commission’s Office of Policy Planning, sent a letter in February to Charbonneau regarding SEA 119.
Edwards wrote that COPA statutes attempt to immunize hospital mergers from antitrust scrutiny, often leaving the FTC unable to challenge even mergers that lead to a monopoly.
“In effect, COPA statutes protect anticompetitive mergers, and they instead impose governmental oversight and regulation in an attempt to mitigate the competitive harm. Unfortunately, the consequences of COPAs are still often harmful to consumers,” Edwards wrote.
Edwards noted that the FTC commissioners unanimously voted in September to authorize staff to submit a public comment urging the Indiana Department of Health to deny the then-pending COPA application filed by Union Health and Terre Haute Regional Hospital in connection with their proposed merger.
The hospitals voluntarily withdrew their initial COPA application in November 2024, but filed a second one earlier this year.
Zack Cooper, a Yale University economist and associate professor of public health and an associate professor of economics submitted a public comment on the new COPA.
He said the proposed merger of Union Health and Terre Haute Regional Hospital would raise commercial health care prices of the merging parties by between 10% and 30%, raise local insurance premiums by 3% to 10%, lower nurses’ wages by approximately 5% and cause approximately 500 job losses outside the health sector.
“I’ve been studying hospital competition and hospital mergers for nearly twenty years, and I firmly believe this merger would harm members of the public in Terre Haute and Vigo County,” Cooper said. “If the two parties are granted the COPA they’re seeking, the merger would result in higher health care prices and job losses–there’s no doubt about that.”
Cooper said each year, there are between 30 and 100 mergers nationwide. About 20% of those mergers would meaningfully raise prices by lessening competition.
The economist said the merger would create a de-facto monopoly, adding that Terre Haute Regional Hospital is unlikely to shut absent a merger.
Cooper told The Lawyer that hospital mergers vary in terms of location, with some being in rural areas and others in large metropolitan areas.
“A merger isn’t inherently a bad thing,” Cooper said.
However, a merger like the one proposed in Terre Haute between two hospitals with no other competition will raise prices substantially, Cooper said.
Hospitals respond
Union Hospital responded to Rokita’s letter.
In its response, posted on its website, Union Hospital explained why the merger with Terre Haute Regional Hospital is “a critical next step to secure health care for the community for years to come.”
The hospital argued the COPA will help preserve and broaden local access to care, protect cost efficiency and build a healthier, more resilient future by leveraging combined resources.
“Since the late nineteenth century, Union Hospital and Regional Hospital have treated patients from the region each and every day,” said Steve Holman, president and CEO of Union Health. “Union Hospital and Regional Hospital have a demonstrated history of being committed to doing what is best for the health and well-being of the people that call the Wabash Valley home. We believe the COPA is the next best step in our journey to care for the people of this community.”
The hospital stated that joining forces with Terre Haute Regional Hospital would maintain and increase access to care, arguing that if the COPA application is approved, Union Hospital is committed to investing at least $117 million in various services and community health programs and recruiting 30+ new primary and specialty care providers.
HCA, the corporation that owns Terre Haute Regional Hospital, also wrote a letter to the health department.
Monica Cintado, HCA’s senior vice president, disputed Rokita’s letter and said there was a serious possibility the Terre Haute hospital would have to close if the COPA is not approved.
Cintado contended HCA had tried to sell the hospital to multiple alternative buyers over the years, including Indiana University Health, Ascension Health, Franciscan Health, Community Health Network, Hendricks Regional and OSF Healthcare.
“None of these health systems expressed interest in a transaction,” Cintado said.
Cintado said approval of the COPA represented the best opportunity to guarantee the continuity of care and ongoing patient access to the hospital’s existing service lines.
Decision on proposed Terre Haute hospital merger
An Indiana Hospital Association spokesperson said the association remains supportive of solutions to ensure continued access to care for the communities the association’s hospitals serve, but the IHA was not involved this year in legislative discussions around SEA 119.
The association released a statement from its president, Scott Tittle, that expressed support for the proposed Terre Haute hospital merger.
“We have every confidence in the proposed merger between Union Health and Terre Haute Regional Hospital, which would allow continued access to high-quality, affordable care for patients in Wabash Valley,” Tittle said.
Charbonneau said he had no information on the health department’s deliberations on the merger and had intentionally stayed away from the process.
He declined to offer an opinion on how the health department might rule on the proposed merger.
Charbonneau acknowledged that, in general, rural counties struggle to deliver quality affordable health care.
The state senator said there’s clearly a down side when a county goes from having competition between hospitals to a monopoly.•
Please enable JavaScript to view this content.