Federal Judge in North Carolina Prevents FTC from Killing Two Hospitals

June 5, 2024

The antitrust power of the Federal Trade Commission includes the ability to suspend business deals while agency’s experts review it, sometimes to death. It must have come as shock today to Chair Lina Khan when federal judge Kenneth D. Bell denied the FTC’s injunction request to prevent the non-profit Novant Health in North Carolina from completing its $320 million bid to buy two hospitals.

What did the judge know that Lina Khan didn’t? He realized that two hospitals provide more care and competition than no hospitals. How’s that for razor-sharp economic analysis?

The current owners of the two North Carolina hospitals had all but stopped investing in these two institutions. Their closure was imminent. Novant declared that itself to be the “last best hope” to save these hospitals for the community – but it had to happen fast. It didn’t take an economist, or for that matter a recent law school graduate, to understand that the closure of two hospitals would not exactly be in the best interests of local care or competition.

Under Khan, FTC’s actions are often this perverse. Yesterday, Illumina finally spun off Grail, the biotech company with which it had hoped to develop a blood assay test to detect 50 different types of cancers. The San Diego Union-Tribune reports that Illumina had spent up to $50 million on legal and other costs to unwind the deal that FTC refused to allow to go through – money that won’t go to medical research. Perhaps the greatest cost will be in human lives, given the delay caused by FTC meddling for the development and marketing of this vital diagnostic test.

Judge Bell’s decision is refreshing, showing that at least one jurist can see through Khan’s BS. I wish more judges would be this proactive and grant more motions to dismiss by businesses seeking to free themselves from FTC’s pointless and often lawless cases.