SUNY Upstate Medical University will not move forward with its plan to acquire Crouse Health System, citing the industry’s economic and operational headwinds.
Syracuse, New York-based Upstate Medical University in April announced plans to acquire neighboring Crouse Hospital. The combination would’ve allowed the financially distressed Crouse to maintain services and boost clinical training opportunities for both hospitals, according to the certificates of need and public advantage applications filed with the state.
Those filings in July shielded the organizations from federal antitrust scrutiny in exchange for prolonged state oversight. However, the Federal Trade Commission in October recommended the state oppose the deal, arguing prices would increase, competition would decline and employee wages would drop when the combined entity would have a market share of nearly 67% of the commercial insured patient services in Onondaga County.
Industry headwinds “make an acquisition impractical at this time,” Upstate President Dr. Mantosh Dewan said in a statement Thursday. If circumstances change, the two systems will “consider revising and resubmitting applications,” he said.
In place of the acquisition, the systems said they will pursue a strategic affiliation, but continue operating as independent entities with their own governance structure. The organizations said in a statement that the affiliation “will provide a structure for joint initiatives on key patient services, educational programs for healthcare providers and provide a platform for future initiatives.”
The FTC has pushed to repeal COPA laws, arguing states are not equipped to oversee hospital mergers.