[Federal Register Volume 60, Number 99 (Tuesday, May 23, 1995)]
[Notices]
[Pages 27292-27305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12589]
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FEDERAL TRADE COMMISSION
[File No. 951 0022]
Columbia/HCA Healthcare Corporation; Proposed Consent Agreement
With Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
permit, among other things, Columbia/HCA and Healthtrust, Inc. to
merge, provided that Columbia/HCA divests seven hospitals within twelve
months (nine months for the divestiture of three hospitals in the Salt
Lake City area). The proposed consent agreement would require the
respondent, for ten years, to obtain Commission approval before
acquiring another acute care hospital in any of the six market areas at
issue, and before transferring an acute care hospital in any of the
areas to another entity that already operates one in that area.
DATES: Comments must be received on or before July 24, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580
FOR FURTHER INFORMATION CONTACT:
Mark Horoschak, FTC/S-3115, Washington, DC 20580, (202) 326-2756.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)). [[Page 27293]]
Agreement Containing Consent Order
In the matter of Columbia/HCA Healthcare Corporation, a
corporation File No. 951-0022.
The Federal Trade Commission (``Commission''), having initiated an
investigation into the proposed acquisition of Healthtrust, Inc.--The
Hospital Company (``Healthtrust'') by Columbia/HCA Healthcare
Corporation (``Columbia/HCA''), and of certain acts and practices of
Columbia/HCA, and it now appearing that Columbia/HCA (``proposed
respondent'') is willing to enter into an agreement containing an order
to divest certain assets, to cease and desist from making certain
acquisitions, and providing for other relief:
It is hereby agreed by and between the proposed respondent by its
duly authorized officers and attorneys, and counsel for the Commission
that:
1. The proposed respondent Columbia/HCA is a corporation organized,
existing, and doing business under and by virtue of the laws of
Delaware, with its principal place of business at One Park Plaza,
Nashville, Tennessee 37203.
2. The proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint.
3. The proposed respondent waives:
a. any further procedural steps;
b. the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. all rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
d. any claim under the Equal Access to Justice Act.
4. This agreement shall not become a part of the public record of
the proceeding unless and until it is accepted by the Commission. If
this agreement is accepted by the Commission it, together with the
draft of complaint contemplated thereby, will be placed on the public
record for a period of sixty (60) days and information in respect
thereto publicly released. The Commission thereafter may either
withdraw its acceptance of this agreement and so notify the proposed
respondent, in which event it will take such action as it may consider
appropriate, or issue and serve its complaint (in such form as the
circumstances may require) and decision, in disposition of the
proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by the proposed respondent that the law has
been violated as alleged in the draft of complaint or that the facts as
alleged in the draft of complaint, other than jurisdictional facts, are
true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to the
proposed respondent, (1) issue its complaint corresponding in form and
substance with the draft of complaint and its decision containing the
following order to divest and to cease and desist, and other relief in
disposition of the proceedings, and (2) make information public with
respect thereto. When so entered, the order shall have the same force
and effect and may be altered, modified, or set aside in the same
manner and within the same time provided by statute for other orders.
The order shall become final upon service. Delivery by the U.S. Postal
Service of the complaint and decision containing the agreed-to order to
proposed respondent's address as stated in this agreement shall
constitute service. The proposed respondent waives any right it may
have to any other manner of service. The complaint may be used in
construing the terms of the order, and no agreement, understanding,
representation, or interpretation not contained in the order or this
agreement may be used to vary or contradict the terms of the order.
7. The proposed respondent has read the proposed complaint and
order contemplated hereby. The proposed respondent understands that
once the order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the order.
Proposed respondent further understands that the Commission's approval,
pursuant to the Commission's order in Docket No. C-3538, of the
Acquisition, as defined in the following order, is conditioned upon the
proposed respondent's compliance with the terms of the following order.
The proposed respondent further understands that it may be liable for
civil penalties in the amount provided by law for each violation of the
following order after it becomes final, or as the successor to
Healthtrust, Inc.--The Hospital Company, of the Commission's order in
Docket No. C-3538.
Order
I
It is ordered That, as used in this order, the following
definitions shall apply:
A. ``Columbia/HCA'' or ``respondent'' means Columbia/HCA Healthcare
Corporation, its partnerships, joint ventures, companies, subsidiaries,
divisions, and groups and affiliates controlled by Columbia/HCA; their
directors, officers, employees, agents, and representatives; and their
successors and assigns.
B. ``Healthtrust'' means Healthtrust, Inc.--The Hospital Company,
its partnerships, joint ventures, companies, subsidiaries, divisions,
and groups and affiliates controlled by Healthtrust; their directors,
officers, employees, agents, and representatives; and their successors
and assigns.
C. ``Commission'' means the Federal Trade Commission.
D. The ``Acquisition'' means the transaction contemplated by the
October 4, 1994, agreement between Columbia/HCA and Healthtrust,
whereby Columbia/HCA will acquire all the stock of Healthtrust, a
wholly-owned subsidiary of Columbia/HCA will be merged with and into
Healthtrust, and Healthtrust will operate as a wholly-owned subsidiary
of Columbia/HCA.
E. ``Acute care hospital'' means a health care facility, licensed
as a hospital, other than a federally-owned facility, having a duly
organized governing body with overall administrative and professional
responsibility, and an organized professional staff, that provides 24-
hour inpatient care, that may also provide outpatient services, and
having as a primary function the provision of inpatient services for
medical diagnosis, treatment, and care of physically injured or sick
persons with short term or episodic health problems or infirmities.
F. To ``operate'' an acute care hospital means to own, lease,
manage, or otherwise control or direct the operations of an acute care
hospital, directly or indirectly.
G. To ``acquire'' an acute care hospital means, directly or
indirectly, through subsidiaries, partnerships, or otherwise:
1. To acquire the whole or any part of the assets used or
previously used within the last two years (and still suitable for use)
for operating an acute care hospital from any person presently engaged
in, or within the two years preceding such acquisition engaged in,
operating an acute care hospital;
2. To acquire the whole or any part of the stock, share capital,
equity, or other interest in any person engaged in, or
[[Page 27294]] within the two years preceding such acquisition engaged
in, operating an acute care hospital;
3. To acquire or otherwise obtain the right to designate, directly
or indirectly, directors or trustees of an acute care hospital; or
4. To enter into any other arrangement to obtain direct or indirect
ownership, management, or control of an acute care hospital or any part
thereof, including, but not limited to, a lease of or management
contract for an acute care hospital.
H. ``Affiliate'' means any entity whose management and policies are
controlled in any way, directly or indirectly, by the person with which
it is affiliated.
I. ``Person'' means any natural person, partnership, corporation,
company, association, trust, joint venture, or other business or legal
entity, including any governmental agency.
J. ``Relevant area(s)'' means:
1. the Salt Lake City-Ogden Metropolitan Statistical Area,
encompassing three contiguous counties in northern Utah: Weber County,
Davis County, and Salt Lake County;
2. the Pensacola area, encompassing the Florida counties of
Escambia and Santa Rosa;
3. the Okaloosa area, encompassing the Florida county of Okaloosa;
4. the Denton area, encompassing the Texas counties of Cooke and
Denton (excluding the incorporated city of Lewisville and that portion
of Denton County south of Texas highway number 121);
5. the Ville Platte-Mamou-Opelousas area, encompassing the
Louisiana parishes of Evangeline and St. Landry; and
6. the Orlando area, encompassing the Florida counties of Seminole,
Orange, and Osceola.
K. ``CLHS'' means Central Louisiana Healthcare System Limited
Partnership, a Louisiana partnership in commendam in which Columbia/HCA
currently holds a partnership interest, its partnerships, joint
ventures, companies including the Ville Platte Medical Center,
subsidiaries, divisions, and groups and affiliates controlled by CLHS;
their directors, officers, employees, agents, and representatives; and
their successors and assigns.
L. ``ORHS'' means Orlando Regional Healthcare System, Inc., a
Florida corporation, its partnerships, joint ventures, companies,
subsidiaries, divisions, and groups and affiliates controlled by ORHS;
their directors, officers, employees, agents, and representatives; and
their successors and assigns.
M. The ``SSH Joint Venture'' means the Florida partnership in which
Healthtrust (through a wholly-owned subsidiary) and ORHS (through a
wholly-owned subsidiary) hold partnership interests, which owns and
operates the South Seminole Hospital in Longwood, Florida.
N. The ``SSH Joint Venture Interest'' means Healthtrust's interest
in the SSH Joint Venture.
O. The ``Schedule A Assets'' means the assets listed on the
attached Schedule A.
P. The ``Schedule B Assets'' means the assets listed on the
attached Schedule B.
Q. The ``Utah Healthtrust Assets'' means the assets listed on the
attached Schedule C.
R. ``Assets and Businesses'' include, but are not limited to, all
assets, properties, businesses, rights, privileges, contractual
interests, licenses, and goodwill of whatever nature, tangible and
intangible, including, without limitation, the following:
1. all real property interests (including fee simple interests and
real property leasehold interests, whether as lessor or lessee),
together with all buildings, improvements, and fixtures located
thereon, all construction in progress thereat, all appurtenances
thereto, and all licenses and permits related thereto (collectively,
the ``Real Property'');
2. all contracts and agreements with physicians, other health care
providers, unions, third party payors, HMOs, customers, suppliers,
sales representatives, distributors, agents, personal property lessors,
personal property lessees, licensors, licensees, consigners, and
consignees (collectively, the ``Contracts'');
3. all machinery, equipment, fixtures, vehicles, furniture,
inventories, and supplies (other than such inventories and supplies as
are used in the ordinary course of business during the time that
Columbia/HCA owns the assets) (collectively, the ``Personal
Property'');
4. all research materials, technical information, management
information systems, software, software licenses, inventions, trade
secrets, technology, know how, specifications, designs, drawings,
processes, and quality control data (collectively, the ``Intangible
Personal Property'');
5. all books, records, and files, excluding, however, the corporate
minute books and tax records of Columbia/HCA and its affiliates; and
6. all prepaid expenses.
II
It is further ordered That:
A. Respondent shall divest (or in the case of the Ville Platte
Medical Center shall cause CLHS to divest), absolutely and in good
faith, within twelve (12) months of the date this order becomes final,
the Schedule A Assets.
B. Respondent shall also divest absolutely and in good faith,
within twelve (12) months of the date this order becomes final, the
Assets and Business of, including all improvements, additions, and
enhancements made to such facilities prior to divestiture, either of
the following:
1. Denton Regional Medical Center, 4405 North Interstate 35,
Denton, Texas 76207, including the following (collectively ``DRMC''):
a. DRMC Office Building, 4401 North I-35, Denton, Texas 76207;
b. the medical office building and vacant land at 3353 I-35E South,
Denton, Texas 76107;
c. the satellite offices operated at Denton Regional Medical
Center, 1207A North Grand Avenue, Gainesville, Texas 76240;
d. Flow Rehabilitation Hospital, 1310 Scripture, Denton, Texas
76201;
e. Denton Regional Medical Center--Little Elm, 420 FM720 West,
Suite 9, Little Elm, Texas 75068;
f. Professional Health Care Services, 621 Londonderry Lane, Denton,
Texas 76205; or
2. Denton Community Hospital, 107 N. Bonnie Brae, Denton, Texas
76201, and the Medical Office Building at Scripture/Bonnie Brae
(collectively ``Denton Community Hospital'').
C. Respondent shall also divest such additional Assets and
Businesses ancillary to the Schedule A Assets and to either DRMC or
Denton Community Hospital, and effect such arrangements as are
necessary to assure the marketability, viability, and competitiveness
of the Schedule A Assets, DRMC and Denton Community Hospital.
D. Respondent shall divest the Schedule A Assets, and either DRMC
or Denton Community Hospital, only to an acquirer or acquirers that
receive the prior approval of the Commission and only in a manner that
receives the prior approval of the Commission. If respondent proposes
to divest Denton Community Hospital, it must provide the Commission
with the written consent of the landlord of such facilities to the
proposed assignment and divestiture at the time that Commission
approval of the divestiture is sought. The purpose of the divestitures
of the Schedule A Assets and of either DRMC or Denton Community
Hospital, is to ensure the continuation of the Schedule A Assets and of
either DRMC or Denton [[Page 27295]] Community Hospital, as ongoing,
viable acute care hospitals and to remedy the lessening of competition
resulting from the Acquisition as alleged in the Commission's
complaint.
E. With respect to the Schedule A Assets and DRMC, respondent shall
comply with all terms of the Agreement to Hold Separate Regarding the
Florida, Texas, and Louisiana Assets, attached hereto and made a part
hereof as Appendix I. Said Hold Separate shall continue in effect until
such time as respondent had fulfilled the divestiture requirements of
this order or until such other time as said Hold Separate provides.
F. Pending divestiture of the Schedule A Assets and DRMC or Denton
Community Hospital, respondent shall take such actions as are necessary
to maintain the present marketability, viability, and competitiveness
of the Schedule A Assets, DRMC, and Denton Community Hospital, and to
prevent the destruction, removal, wasting, deterioration, or impairment
of any of the Schedule A Assets, DRMC, and Denton Community Hospital,
except for ordinary wear and tear.
G. A condition of approval by the Commission of each divestiture
shall be a written agreement by the acquirer(s) of the Schedule A
Assets and of either DRMC or Denton Community Hospital, that it will
not sell for a period of ten (10) years from the date of divestiture,
directly or indirectly, through subsidiaries, partnerships, or
otherwise, without the prior approval of the Commission, any Schedule A
Asset, DRMC, or Denton Community Hospital to any person who operates,
or will operate immediately following the sale, any other acute care
hospital in the same relevant area where the divested acute care
hospital is located. Provided, however, that the acquirer is not
required to seek prior approval of the Commission for the sale of any
of the assets identified in any Part II of Schedule A.
III
It is further ordered That:
A. Within six (6) months of the date this order becomes final,
respondent shall terminate, absolutely and in good faith, the SSH Joint
Venture, by either acquiring ORSH's interest in the SSH Joint Venture
or by divesting the SSH Joint Venture Interest. The purpose of the
termination of the SSH Joint Venture is to ensure the continuation of
the South Seminole Hospital as an ongoing, viable acute care hospital
and to remedy the lessening of competition resulting from the
Acquisition as alleged in the Commission's complaint.
B. If respondent terminates the SSH Joint Venture by acquiring
ORHS's interest in the SSH Joint Venture, such acquisition shall occur
only in such a manner that receives the prior approval of the
Commission. If respondent terminates the Joint Venture by divesting the
SSH Joint Venture Interest, such divestiture shall be made only to an
acquirer that receives the prior approval of the Commission and only in
a manner that receives the prior approval of the Commission.
C. With respect to the SSH Joint Venture Interest, respondent shall
comply with all terms of the Agreement to Hold Separate Regarding the
Florida, Texas, and Louisiana Assets, attached hereto and made a part
hereof as Appendix I. Said Hold Separate shall continue in effect until
such time as respondent has fulfilled the divestiture requirements of
this order or until such other time as said Hold Separate provides.
D. Pending the divestiture of the SSH Joint Venture Interest,
respondent shall take such actions as are necessary to maintain the
present marketability, viability, and competitiveness of the South
Seminole Hospital, and to prevent the destruction, removal, wasting,
deterioration, or impairment of the South Seminole Hospital, except for
ordinary wear and tear.
E. A condition of approval by the Commission of the divestiture of
the SSH Joint Venture Interest, to any acquirer except ORHS, shall be a
written agreement by the acquirer of the SSH Joint Venture Interest
that it will not sell for a period of ten (10) years from the date of
divestiture, directly or indirectly, through subsidiaries,
partnerships, or otherwise, without the prior approval of the
Commission, any interest in South Seminole Hospital to any person who
operates, or will operate immediately following the sale, any other
acute care hospital in the Orlando area.
IV
It is further ordered That:
A Respondent shall divest, absolutely and in good faith, within
nine (9) months of the date the Commission approves the Acquisition
pursuant to Paragraph IV.E. of the order in Docket No. C-3538, the
Schedule B Assets.
B. Respondent shall also divest such additional Assets and
Businesses ancillary to the Schedule B Assets and effect such
arrangements as are necessary to assure the marketability, viability,
and competitiveness of the Schedule B Assets.
C. Respondent shall divest the Schedule B Assets only to an
acquirer or acquirers that receive the prior approval of the
Commission, and only in a manner that receives the prior approval of
the Commission. The purpose of the divestitures of the Schedule B
Assets is to ensure the continuation of the Schedule B Assets as
ongoing, viable acute care hospitals and to remedy the lessening of
competition resulting from the acquisition as alleged in the
Commission's complaint and as described in the Commission's letter
approving the Acquisition.
D. Respondent shall comply with all terms of the Agreement to Hold
Separate regarding the Utah Healthtrust Assets listed on Schedule C,
and as described in Appendix II which is attached hereto and made a
part hereof (``Utah Hold Separate''). Said Utah Hold Separate shall
continue in effect until such time as respondent has fulfilled the
divestiture requirements of Paragraph IV of this order, or until such
other time as the Utah Hold Separate provides.
E. Pending divestiture of the Schedule B Assets, respondent shall
take such actions as are necessary to maintain the present
marketability, viability, and competitiveness of the Schedule B Assets
and of the Utah Healthtrust Assets, and to prevent the destruction,
removal, wasting, deterioration, or impairment of any of the Schedule B
Assets and any of the Utah Healthtrust Assets, except for ordinary wear
and tear.
F. A condition of approval by the Commission of each divestiture
shall be a written agreement by the acquirer(s) of each Schedule B
Asset that it will not sell for a period of ten (10) years from the
date of divestitute, directly or indirectly, through subsidiaries,
partnerships, or otherwise, without the prior approval of the
Commission, any Schedule B Asset to any person who operates, or will
operate immediately following the sale, any other acute care hospital
in the same relevant area where the divested acute care hospital is
located. Provided, however, that the acquirer is not required to seek
prior approval of the Commission for the sale of any of the assets
identified in any Part II of Schedule B.
V
It Is further ordered That:
A. If the respondent has not divested (or in the case of the Ville
Platte Medical Center has not caused CLHS to divest), absolutely and in
good faith and with the Commission's prior approval, each Schedule A
Asset and either DRMC or Denton Community Hospital, in accordance with
this order, within twelve (12) months of the date this order
[[Page 27296]] becomes final, the Commission may appoint a trustee to
divest the undivested Schedule A Assets and either DRMC or Denton
Community Hospital.
B. If the respondent has not terminated absolutely and in good
faith and with the Commission's prior approval, the SSH Joint Venture,
in accordance with this order, within six (6) months of the date this
order becomes final, the Commission may appoint a trustee to divest the
SSH Joint Venture Interest.
C. If the respondent has not divested, absolutely and in good faith
and with the Commission's prior approval, each Schedule B Asset, in
accordance with this order within nine (9) months of the date the
Commission approves the Acquisition pursuant to the order in Docket No.
C-3538, the Commission may appoint a trustee to divest the Utah
Healthtrust Assets.
D. In the event that the Commission or the Attorney General brings
an action for any failure to comply with this order or in any way
relating to the Acquisition, pursuant to section 5(l) of the Federal
Trade Commission Act, 15 U.S.C. 45(l), or any other statute enforced by
the Commission, the respondent shall consent to the appointment of a
trustee in such action. Neither the appointment of a trustee nor a
decision not to appoint a trustee under Paragraph V.A, V.B, or V.C
shall preclude the Commission or the Attorney General from seeking
civil penalties or any other relief available to it for any failure by
the respondent to comply with this order, or the order in Docket No. C-
3538.
E. If a trustee is appointed by the Commission or a court pursuant
to Paragraph V.A, V.B, or V.C of this order, the respondent shall
consent to the following terms and conditions regarding the trustee's
powers, duties, authority, and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of the respondent, which consent shall not be unreasonably withheld.
The trustee shall be a person with experience and expertise in
acquisitions and divestitures. If respondent has not opposed, in
writing, including the reasons for opposing, the selection of any
proposed trustee within ten (10) days after notice by the staff of the
Commission to respondent of the identity of any proposed trustee,
respondent shall be deemed to have consented to the selection of the
proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest any undivested
Schedule A Asset, DRMC or Denton Community Hospital, the SSH Joint
Venture Interest, or Utah Healthtrust Asset.
3. Within ten (10) days after appointment of the trustee,
respondent shall execute a trust agreement that, subject to the prior
approval of the Commission and, in the case of a court-appointed
trustee, of the court, transfers to the trustee all rights and powers
necessary to permit the trustee to effect the divestiture(s) required
by this order.
4. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement described in Paragraph V.E.3 to
accomplish the divestiture(s), which shall be subject to the prior
approval of the Commission. If, however, at the end of the twelve-month
period, the trustee has submitted a plan of divestiture or believes
that divestiture can be achieved within a reasonable time, the
divestiture period may be extended by the Commission, or in the case of
a court-appointed trustee, by the court; provided however, the
Commission may extend this period only two (2) times.
5. The trustee shall have full and complete access to the
personnel, books, records, and facilities related to the Schedule A
Assets, DRMC, Denton Community Hospital, the SSH Joint Venture
Interest, the Schedule B Assets, the Utah Healthtrust Assets, or to any
other relevant information as the trustee may request. Respondent shall
develop such financial or other information as such trustee may
reasonably request and shall cooperate with the trustee. Respondent
shall take no action to interfere with or impede the trustee's
accomplishment of the divestiture(s). Any delays in divestiture caused
by respondent shall extend the time for divestiture under this
Paragraph in an amount equal to the delay, as determined by the
Commission or, for a court appointed trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that is
submitted to the Commission, subject to the respondent's absolute and
unconditional obligation to divest at no minimum price. The
divestiture(s) shall be made in the manner and to an acquirer(s) as set
forth in Paragraph II for the Schedule A Assets and DRMC or Denton
Community Hospital; Paragraph III for the SSH Joint Venture Interest;
and Paragraph IV and Paragraph V.C for the Utah Healthtrust Assets;
provided, however, if the trustee receives bona fide offers from more
than one acquiring entity for any one facility or asset, and if the
Commission determines to approve more than one such acquiring entity,
the trustee shall divest to the acquiring entity selected by respondent
from among those approved by the Commission.
7. The trustee shall serve, without bond or other security, at the
cost and expense of the respondent, on such reasonable and customary
terms and conditions as the Commission or a court may set. The trustee
shall have the authority to employ, at the cost and expense of
respondent, such consultants, accountants, attorneys, investment
bankers, business brokers, appraisers, and other representatives and
assistants as are necessary to carry out the trustee's duties and
responsibilities. The trustee shall account for all monies derived from
the sale and all expenses incurred. After approval by the Commission
and, in the case of a court-appointed trustee, by the court, of the
account of the trustee, including fees for his or her services, all
remaining monies shall be paid at the direction of the respondent and
the trustee's power shall be terminated. The trustee's compensation
shall be based at least in significant part on a commission arrangement
contingent on the trustee's divesting the undivested Schedule A Assets,
either DRMC or Denton Community Hospital, the SSH Joint Venture
Interest, or the Utah Healthtrust Assets.
8. Respondent shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparation for, or defense of any
claim, whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result from
misfeasance, gross negligence, willful or wanton acts, or bad faith by
the trustee.
9. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as provided in
Paragraph V.A, V.B, or V.C of this order.
10. The Commission or, in the case of a court-appointed trustee,
the court, may on its own initiative, or at the request of the trustee,
issue such additional orders or directions as may be necessary or
appropriate to accomplish the divestiture(s) required by this order.
11. The trustee shall have no obligation or authority to operate or
maintain the Schedule A Assets, DRMC, Denton Community Hospital, the
SSH [[Page 27297]] Joint Venture Interest, or the Utah Healthtrust
Assets.
12. The trustee shall report in writing to the respondent and to
the Commission every sixty (60) days concerning the trustee's effort to
accomplish divestiture.
VI
It is further ordered That, for a period of ten (10) years from the
date this order becomes final, respondent shall not, without the prior
approval of the Commission, directly or indirectly, through
subsidiaries, partnerships, or otherwise:
A. Acquire any stock, share capital, equity, or other interest in
any person presently engaged in, or within the two years preceding such
acquisition engaged in, operating an acute care hospital in any
relevant area;
B. Acquire any assets used, or previously used, in any relevant
area (and still suitable for use) for operating an acute care hospital
from any person presently engaged in, or within the two years preceding
such acquisition engaged in, operating an acute care hospital in any
relevant area;
C. Enter into any agreement or other arrangement to obtain direct
or indirect ownership, management, or control of any acute care
hospital, or any part thereof, in any relevant area, including but not
limited to, a lease of or management contract for any such acute care
hospital;
D. Acquire or otherwise obtain the right to designate, directly or
indirectly, directors or trustees of any acute care hospital in any
relevant area;
E. Permit any acute care hospital it operates in any relevant area
to be acquired by any person that operates, or will operate immediately
following such acquisition, any other acute care hospital in the same
relevant area.
Provided, however, that such prior approval shall not be required
for:
1. the establishment by respondent of a new acute care hospital
facility in a relevant area: (a) that is a replacement for an existing
acute care hospital facility operated by respondent, and not required
to be divested by respondent pursuant to this order, in the same
relevant area; or (b) that is not a replacement for any acute care
hospital facility in any relevant area;
2. any transaction otherwise subject to this Paragraph VI of this
order if the fair market value of (or, in case of an asset acquisition,
the consideration to be paid for) the acute care hospital or part
thereof to be acquired does not exceed one million dollars
($1,000,000); or
3. the acquisition of products or services in the ordinary course
of business.
VII
It is further ordered That, for a period of ten (10) years from the
date this order becomes final, respondent shall not, directly or
indirectly, through subsidiaries, partnerships or otherwise, without
providing advance written notification to the Commission, consummate
any joint venture or other arrangement with any other acute care
hospital in any relevant area for the joint establishment or operation
of any new acute care hospital, or any hospital, medical, surgical,
diagnostic, or treatment service or facility, or part thereof in the
same relevant area where both parties operate an acute care hospital.
Such advance notification shall be filed immediately upon respondent's
issuance of a letter of intent for, or execution of an agreement to
enter into, such a transaction, whichever is earlier.
Said notification required by this Paragraph VII of this order
shall be given on the Notification and Report Form set forth in the
Appendix to Part 803 of Title 16 of the Code of Federal Regulations (as
amended), and shall be prepared and transmitted in accordance with the
requirements of that part, except that no filing fee will be required
for any such notification, notification need not be made to the United
Stated Department of Justice, and notification is required only of
respondent and not of any other party to the transaction. Respondent is
not required to observe any waiting period for said notification
required by this Paragraph VII.
Respondent shall comply with reasonable requests by the Commission
staff for additional information concerning any transaction subject to
this Paragraph VII of this order, within fifteen (15) days of service
of such requests.
Provided, however, that no transaction shall be subject to this
Paragraph VII of this order if:
1. the fair market value of the assets to be contributed to the
joint venture or other arrangement by acute care hospitals not operated
by respondent does not exceed one million dollars ($1,000,000);
2. the service, facility, or part thereof to be established or
operated in a transaction subject to this order is to engage in no
activities other than the provision of the following services: Laundry;
data processing; purchasing; materials management; billing and
collection; dietary; industrial engineering; maintenance; printing;
security; records management; laboratory testing; personnel education,
testing, or training; or
3. notification is required to be made, and has been made, pursuant
to Section 7A of the Clayton Act, 15 U.S.C. 18a, or prior approval by
the Commission is required, and has been requested, pursuant to
Paragraph VI of this order.
VIII
It is further ordered That, for a period of ten (10) years from the
date this order becomes final, respondent shall not permit all, or any
substantial part of, any acute care hospital it operates in any
relevant area to be acquired by any other person (except pursuant to
the divestitures required by Paragraphs II, III, and IV of this order),
unless the acquiring person files with the Commission, prior to the
closing of such acquisition, a written agreement to be bound by the
provisions of this order, which agreement respondent shall require as a
condition precedent to the acquisition.
IX
It is further ordered That:
A. Within sixty (60) days after the date this order becomes final
and every sixty (60) days thereafter until the respondent has fully
complied with Paragraphs II, III, and IV of this order, respondent
shall submit to the Commission a verified written report setting forth
in detail the manner and form in which it intends to comply, is
complying, and has complied with Paragraphs II, III, and IV of this
order. Respondent shall include in its compliance reports, among other
things that are required from time to time, a full description of the
efforts being made to comply with Paragraphs II, III, and IV of the
order, including a description of all substantive contacts or
negotiations for the divestitures or the termination of the SSH joint
venture, and the identify of all parties contacted. Respondent shall
include in its compliance reports copies of all written communications
to and from such parties, all internal memoranda, and all reports and
recommendations concerning the divestitures.
B. One (1) year from the date this order becomes final, annually
for the next nine (9) years on the anniversary of the date this order
becomes final, and at other times as the Commission may require,
respondent shall file a verified written report with the Commission
setting forth in detail the manner and form in which it has complied
and it is complying with Paragraphs V, VI, VII, and VIII of this
order. [[Page 27298]]
X
It is further ordered That respondent shall notify the Commission
at least thirty (30) days prior to any proposed change in the corporate
respondent such as dissolution, assignment, sale resulting in the
emergence of a successor corporation, or the creation or dissolution of
subsidiaries or any other change in the corporation that may affect
compliance obligations arising out of the order.
XI
It is further ordered That, for the purpose of determining or
securing compliance with this order, the respondent shall permit any
duly authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda, and other records and documents in the possession or under
the control of the respondent relating to any matters contained in this
order; and
B. Upon five days' notice to respondent and without restraint or
interference from it, to interview officers, directors, or employees of
respondent, who may have counsel present regarding such matters.
Schedule A
The assets to be divested pursuant to Paragraph II (``Schedule A
Assets'') shall consist of, without limitation, all Assets and
Businesses (including all improvements, additions and enhancements made
to such assets prior to divestiture), of the following:
A. The Pensacola area Schedule A Assets are:
Part I
1. Medical Center of Santa Rosa, Inc., d.b.a. Santa Rosa Medical
Center, 1450 Berryhill Road, Milton, Florida 32570
Part II
2. MRI (Magnetic Resonance Imaging)--free-standing modular building
attached to hospital by walkway, leased 60 months--originated in 1993.
3. EMS (Emergency Medial Services), 4930 Glover Lane, Milton, Florida
32570
4. Berryhill Medical Park--including undeveloped land Milton, Florida
32570
Master Leased 10 years:
Building 1--1540 Berryhill Medical Park (7,612 sq. ft.)
Building 2--1550 Berryhill Medical Park (5,943 sq. ft.)
Building 3--1560 Berryhill Medical Park (4,427 sq. ft.)
5. Santa Rosa Primary Care Center, Leased Building at 4928 Highway 90,
Pace, Florida 32571
6. Office Space Leases (as Tenant):
3,250 sq. ft. from Pace Medical Center Partnership, 2874 Highway
90, Building A, Pace, Florida 32571
1,360 sq. ft. from Pace Medical Center Partnership, 2874 Highway
90, Building B, Pace, Florida 32571
25,200 sq, ft. from Dave Gilbert, 5950 Berryhill Road, Building
1.3, Santa Rosa, Florida 32570
2. The Okaloosa area Schedule A Assets are:
Part I
1. North Okaloosa Medical Center--Hospital, 151 Redstone Avenue,
Crestview, Florida 32539 (with approximately 34 acres of land).
Part II
2. Crestview Professional Condominium Association, Professional Office
Buildings, 131 Redstone Avenue, Crestview, Florida 32539 (Suites 101,
103, 104, 105, 107, 108, 109)
3. Lease of North Okaloosa Medical Office Building, 131 Redstone
Avenue, Crestview, Florida 32539 (Suites 125, 127 and 129)
4. Lease of Medical Office Building, 127 Redstone Avenue, Crestview,
Florida 32539
5. Rural Health Clinic, LaGrange Medical Clinic Building, Rt. 3, Box
16, Highway 331 North, Freeport, Florida 34329
6. Bluewater Bay Clinic, Market Place Professional Center, 1507
Merchants Way, Niceville, Florida 32588
7. Rural Health Clinic, Lease of Access Medical Clinic Building, 130
Redstone Avenue, Crestview, Florida 32539
3. The Ville Platte-Mamou-Opelousas area Schedule A Assets are:
Part I
1. Ville Platte Medical Center, 800 East Main Street, Ville Platte,
Louisiana 70586
Part II
2. Lease (expires October 1995) of the Ardwin Physicians Office
Building, Ville Platte, Louisiana
Schedule B
The assets to be divested pursuant to Paragraph IV (``Schedule B
Assets'') shall consist of, without limitation, all Assets and
Businesses (including all improvements, additions and enhancements made
to such assets prior to divestiture), of the following:
a. The Pioneer Valley Assets are:
Part I
1. Pioneer Valley Hospital, 3460 South Pioneer Park, West Valley City,
Utah 84120
Part II
2. Three (3) Medical Office Buildings (on hospital campus)
3. Lease of 69,382 sq. ft. (on hospital campus)
4. Land (empty lot), 40th West Street, West Jordan, Utah 84088
5. Lease of 11,750 sq. ft. (corner of 90th South Street and 27th West
Street), West Jordan, Utah 84088
6. Least of 7,134 sq. ft., 150 Wright Bros. Drive, Suite 540, Salt Lake
City, Utah 84116
7. Salt Lake Industrial Clinic, 441 S. Redwood Road, Salt Lake City,
Utah 84104
B. The Jordan Valley Assets are:
Part I
1. Jordan Valley Hospital, 3580 West 9000 South, West Jordan, Utah
84088
Part II
2. Three (3) leases of office space (on hospital campus) (12,000 sq,
ft.; 3,374 sq. ft; and 4,620 sq. ft)
3. 12% limited liability partnership in South Ridge Professional Plaza
(on campus)
4. Lease of Medical Office Building (Perry Realty), South Valley
Medical Plaza, 3590 West 9000 South, West Jordan, Utah 84088
C. The Davis Hospital Assets are:
Part I
1. Davis Hospital and Medical Center, 1600 West Antelope Drive, Layton,
Utah 84041
Part II
2. Medical Office Building, 1660 West Antelope Drive, Layton, Utah
84041
3. Medical Office Building, 2132 North 1700 West, Layton, Utah 84041
Schedule C--Utah Healthtrust Assets
The Utah Healthtrust Assets shall consist of, without limitation,
all Assets and Businesses (including all improvements, additions and
enhancements made to such assets prior to divestiture), of Healthtrust
in the State of Utah at the time of the Acquisition, including, without
limitation, the following:
1. The following facilities:
a. Pioneer Valley Hospital, 3460 South Pioneer Park, West Valley
City, Utah 84120; three (3) medical office buildings on the campus of
the hospital; the lease of 69,382 sq. feet on the hospital campus; land
(empty lot) at [[Page 27299]] 40th West Street, West Jordan, Utah
84088; lease of 11,750 sq. ft. (corner of 90th South Street and 27th
West Street), West Jordan, Utah 84088; and lease of 7,134 sq. ft., 150
Wright Bros. Drive, Suite 540, Salt Lake City, Utah 84116;
b. Jordan Valley Hospital, 3580 West 9000 South, West Jordan, Utah
84084; three (3) leases of office space on the campus of the hospital
(12,000 sq. ft., 3,374 sq. ft., and 4,620 sq. ft.); a 12 percent
limited lability partnership in South Ridge Professional Plaza, and the
lease of Medical Office Building (Perry Realty), South Valley Medical
Plaza; 3590 West 9000 South, West Jordan, Utah 84088;
c. Lakeview Hospital, 630 East Medical Drive, Bountiful, Utah
84010;
d. Brigham City Community Hospital, 950 South 500 West, Brigham
City, Utah 84302;
e. Ogden Regional Medical Center, 5475 South 500 East, Ogden, Utah
84405;
f. Castleview Hospital, 300 North Hospital Drive, Price, Utah
84501;
g. Springville Medical Center, 730 East 300 South, Springville,
Utah 84663; and
h. Ashley Valley Medical Center, 151 West 200 North, Vernal, Utah
84078; and
2. HTI of Utah, Inc., its partnerships, joint ventures, companies,
subsidiaries, divisions, and groups and affiliates controlled by HTI of
Utah or Healthtrust in Utah; their directors, officers, employees,
agents, and representatives; and their successors and assigns; and the
following corporations and their successors and assigns;
a. Brigham City Community Hospital, Inc.;
b. Castleview Hospital, Inc.;
c. HTI HomeMed of Utah, Inc.;
d. HTI-Managed Care of Utah, Inc.;
e. HTI Physician Services of Utah, Inc.;
f. HTI Utah Data Corporation;
g. Hospital Corporation of Utah;
h. Intergroup Healthcare Corporation of Utah;
i. Medical Services of Salt Lake City, Inc.;
j. MHHE Corporation;
k. Mountain View Hospital, Inc.;
l. Ogden Medical Center, Inc.;
m. Pioneer Valley Hospital, Inc.; and
n. West Jordan Hospital Corporation.
Appendix I--Agreement to Hold Separate Regarding the Florida, Texas,
and Louisiana Assets
In the matter of Columbia/HCA Healthcare Corporation, a
corporation. File No. 951-0022.
This agreement to Hold Separate Regarding the Florida, Texas and
Louisiana Assets (``Agreement'') is by and between Columbia/HCA
Healthcare Corporation (``Columbia/HCA'' or ``respondent''), a
corporation organized, existing, and doing business under and by
virtue of the laws of the State of Delaware, with its principal
place of business at One Park Plaza, Nashville, Tennessee 37203; and
the Federal Trade Commission (``Commission''), an independent agency
of the United States Government, established under the Federal Trade
Commission Act of 1914, 15 U.S.C. 41, et seq.
Premises
Whereas, on October 4, 1994, Columbia/HCA and Healthtrust Inc.--
The Hospital Company (``Healthtrust'') entered into an agreement
whereby Columbia/HCA will acquire all the stock of Healthtrust, a
wholly-owned subsidiary of Columbia/HCA will be merged with and into
Healthtrust, and Healthtrust will operate as a wholly-owned
subsidiary of Columbia (the ``Acquisition''); and
Whereas, Columbia/HCA, with its principal place of business at
one Park Plaza, Nashville, Tennessee 37203, owns and operates, among
other things, acute care hospitals; and
Whereas, the Commission is now investigating the Acquisition to
determine if it would violate any of the statutes enforced by the
Commission; and
Whereas, if the Commission accepts the Agreement Containing
Consent Order (``Consent Order''), which would require the
divestiture of certain assets listed in Paragraph II of the Consent
Order (``Schedule A Assets and DRMC or Denton Community Hospital'')
and termination of certain interests described in Paragraph III of
the Consent Order (``SSI Joint Venture''), the Commission must place
the Consent Order on the public record for a period of at least
sixty (60) days and may subsequently withdraw such acceptance
pursuant to the provisions of Section 2.34 of the Commission's
Rules; and
Whereas, the Commission is concerned that if an understanding is
not reached, preserving the status quo ante of the Schedule A
Assets, DRMC and the SSI Joint Venture Interest (collectively the
``Hold Separate Assets''), during the period prior to the final
acceptance and issuance of the Consent Order by the Commission
(after the 60-day public comment period), divestitures resulting
from any proceeding challenging the legality of the Acquisition
might not be possible, or might be less than an effective remedy;
and
Whereas, the Commission is concerned that if the Acquisition is
consummated, it will be necessary to preserve the Commission's
ability to require the divestitures of the Schedule A Assets, DRMC
or Denton Community Hospital, and the SSI Joint Venture Interest,
and the Commission's right to have the Hold Separate Assets continue
as viable acute care hospitals independent of Columbia/HCA; and
Whereas, the purposes of this Agreement and the Consent Order
are to:
(i) preserve the Hold Separate Assets as viable, competitive,
and ongoing acute care hospitals, independent of Columbia/HCA,
pending the divestitures of the Schedule A Assets and DRMC or Denton
Community Hospital, and the termination of the SSI Joint Venture as
required under the terms of the Consent Order;
(ii) prevent interim harm to competition from the operation of
the Hold Separate Assets pending the divestitures as required under
the terms of the Consent Order;
(iii) remedy any anticompetitive effects of the Acquisition;
Whereas, respondent's entering into this Agreement shall in no
way be construed as an admission by respondent that the Acquisition
is illegal; and
Whereas, respondent understands that no act or transaction
contemplated by this Agreement shall be deemed immune or exempt from
the provisions of the antitrust laws or the Federal Trade Commission
Act by reason of anything contained in this Agreement.
Now, therefore, the parties agree, upon understanding that the
Commission has not yet determined whether the Acquisition will be
challenged, and in consideration of the Commission's agreement that,
at the time it accepts the Consent Order for public comment it will
grant early termination of the Hart-Scott-Rodino waiting period, and
unless the Commission determines to reject the Consent Order, it
will not seek further relief from respondent with respect to the
Acquisition, except that the Commission may exercise any and all
rights to enforce this Agreement and the Consent Order to which it
is annexed and made a part thereof, and in the event the required
divestitures of the Schedule A Assets and DRMC or Denton Community
Hospital, and the termination of the SSI Joint Venture are not
accomplished, to appoint a trustee to seek divestitures of said
assets pursuant to the Consent Order, to seek civil penalties, to
seek a court appointed trustee, and/or seek other equitable relief,
as follows:
1. Respondent agrees to execute the Agreement Containing Consent
Order and be bound by the Consent Order.
2. Respondent agrees that from the date this Agreement is
accepted until the earliest of the dates listed in subparagraphs 2.a
or 2.b, it will comply with the provisions of paragraph 3 of this
Agreement:
a. three (3) business days after the Commission withdraws its
acceptance of the Consent Order pursuant to the provisions of
Section 2.34 of the Commission's Rules; or
b. the day after the last of the divestitures of the Schedule A
Assets and DRMC or Denton Community Hospital, and the termination of
the SSI Joint Venture, as required by the Consent Order, is
completed.
3. To ensure the complete independence and viability of the hold
Separate Assets, and to assure that no competitive information is
exchanged between Columbia/HCA and the managers of the Hold Separate
Assets, respondent shall hold the Schedule A Assets, DRMC and the
SSI Joint Venture Interest, as they are presently constituted,
separate and apart on the following terms and conditions:
a. The Hold Separate Assets, as they are presently constituted,
shall be held separate and apart and shall be managed and operated
[[Page 27300]] independently of respondent (meaning her and
hereinafter, Columbia/HCA excluding the Hold Separate Assets),
except to the extent that respondent must exercise direction and
control over such assets to assure compliance with this Agreement or
the Consent Order, and except as otherwise provided in this
Agreement.
b. Prior to, or simultaneously with the Acquisition, respondent
shall organize a distinct and separate legal entity, either a
corporation, limited liability company, or general or limited
partnership (``New Company'') and adopt constituent documents for
the New Company that are not inconsistent with other provisions of
this Agreement or the Consent Order. Respondent shall transfer (or
in the case of the Ville Platte Medical Center, cause the Central
Louisiana Healthcare System Limited Partnership (``CLHS'') to
transfer) all ownership and control of all Hold Separate Assets to
the New Company.
c. The board of directors of the New Company, or, in the event
respondent organizes an entity other than a corporation, the
government body of the entity (``New Board''), shall have three
members. Respondent shall elect the members of the New Board. The
New Board shall consist of the following three persons: Winfield C.
Dunn, Samuel H. Howard, and David C. Colby, provided they agree, or
comparable, knowledgeable persons. The Chairman of the New Board
shall be: Winfield C. Dunn (provided he agrees), or a comparable,
knowledgeable person, who shall remain independent of Columbia/HCA
and competent to assure the continued viability and competitiveness
of the Hold Separate Assets and the south Seminole Hospital in
Longwood, Florida. The New Board shall include no more than one
member who is a director, officer, employee, or agent of respondent,
who shall be David C. Colby, provided he agrees, or a comparable
knowledgeable person (``the respondent's New Board member''). The
New Board shall meet monthly during the course of the Hold Separate,
and as otherwise necessary. Meetings of the New Board during the
term of this Agreement shall be audiographically transcribed and the
tapes retained for two (2) years after the termination of this
Agreement.
d. Respondent shall not exercise direction or control over, or
influence directly or indirectly, the Hold Separate Assets or South
Seminole Hospital, the independent Chairman of the Board of the New
Company, the New Board, or the New Company or any of its operations
or businesses; provided, however, that respondent may exercise only
such direction and control over the New Company as is necessary to
assure compliance with this Agreement or the Consent Order, or with
all applicable laws. In addition, as to the SSH Joint Venture and
South Seminole Hospital, only the following individuals within
Columbia/HCA and Healthtrust shall have access to or involvement
with termination of the SSI Joint Venture or efforts to divest the
SSI Joint Venture Interest: Richard L. Scott, Stephen T. Braun,
Donald P. Fay, Ashby Q. Burks, Joseph D. Moore, Phillip D. Wheeler,
and George M. Garrett.
e. Respondent shall maintain the viability, competitiveness, and
marketability of the Hold Separate Assets; shall not sell, transfer,
or encumber said Assets (other than in the normal course of
business); and shall not cause or permit the destruction, removal,
wasting, or deterioration, or otherwise impair their viability,
competitiveness, or marketability of said Hold Separate Assets.
f. Except for the respondent's New Board member, respondent
shall not permit any director, officer, employee, or agent of
respondent to also be a director, officer, or employee of the New
Company.
g. The New Company shall be staffed with sufficient employees to
maintain the visibility and competitiveness of the Hold Separate
Assets, which employees shall be selected from the existing employee
base of each facility or entity and may also be hired from sources
other than these facilities and entities.
h. With the exception of the respondent's New Board Member,
respondent shall not change the composition of the New Board unless
the independent Chairman consents. The independent Chairman shall
have power to remove members of the New Board for cause and to
require respondent to appoint replacement members to the New Board
as provided in Paragraph 3.c. Respondent shall not change the
composition of the management of the New Company except that the New
Board shall have the power to remove management employees for cause.
i. If the independent Chairman ceases to act or fails to act
diligently, a substitute Chairman shall be appointed in the same
manner as provided in Paragraph 3.c of this Agreement.
j. Except as required by law, and except to the extent that
necessary information is exchanged in the course of evaluating the
Acquisition, defending investigations, defending or prosecuting
litigation, obtaining legal device, negotiating agreements to divest
assets, or complying with this Agreement or the Consent Order,
respondent shall not receive or have access to, or use or continue
to use, any Material Confidential Information not in the public
domain about the New Company or the activities of the hospitals
operated by the New Board. Access to Material Confidential
Information relating to South Seminole Hospital or the SSH Joint
Venture, for these limited, stated purposes shall be restricted
within Columbia/HCA and Healthrust to those individuals named in
Paragraph 3.d, above. Nor shall the New Company or the New Board
receive or have access to, or use or continue to use, any Material
Confidential Information not in the public domain about respondent
and relating to respondent's acute care hospitals. Respondent may
receive, on a regular basis, aggregate financial information
relating to the New Company necessary and essential to allow
respondent to prepare United States consolidated financial reports,
tax returns, and personnel reports. Any such information that is
obtained pursuant to this subparagraph shall be used only for the
purposes set forth in this subparagraph. (``Material Confidential
Information,'' as used herein, means competitively sensitive or
proprietary information not independently known to an entity from
sources other than the entity to which the information pertains, and
includes, but is not limited to, customer lists, price lists,
marketing methods, patents, technologies, processes, or other trade
secrets.)
k. Except as permitted by this Agreement, the respondent's New
Board member shall not, in his or her capacity as a New Board
member, receive Material Confidential Information and shall not
disclose any such information received under this Agreement to
respondent, or use it to obtain any advantage for respondent. The
respondent's New Board member shall enter a confidentiality
agreement prohibiting disclosure of Material Confidential
Information. The respondent's New Board member shall participate in
matters that come before the New Board only for the limited purposes
of considering a capital investment or other transaction exceeding
$250,000, approving any proposed budget and operating plans, and
carrying out respondent's responsibilities under this Agreement and
the Consent Order. Except as permitted by this Agreement, the
respondent's New Board member shall not participate in any matter,
or attempt to influence the votes of the other members of the New
Board with respect to matters, that would involve a conflict of
interest if respondent and the New Company were separate and
independent entities.
l. Any material transaction of the New Company that is out of
the ordinary course of business must be approved by a majority vote
of the New Board; provided that the New Company shall engage in no
transaction, material or otherwise, that is precluded by this
Agreement.
m. If necessary, respondent shall provide the New Company with
sufficient working capital to operate the Hold Separate Assets at
their respective current rates of operation, to meet any capital
calls anticipated in respect of the SSH Joint Venture, and to carry
out any capital improvement plans for the Schedule A Assets, DRMC
and the South Seminole Hospital that have already been approved.
n. Columbia/HCA shall continue to provide the same support
services to the Hold Separate Assets as are being provided to such
assets by Columbia/HCA or Healthtrust as of the date this Agreement
is signed. Columbia/HCA may charge the Hold Separate Assets the same
fees, if any, charged by Columbia/HCA or Healthtrust for such
support services as of the date of this Agreement. Columbia/HCA
personnel providing such support services must retain and maintain
all Material Confidential Information of the Hold Separate Assets on
a confidential basis, and, except as if permitted by this Agreement,
such persons shall be prohibited from providing, discussing,
exchanging, circulating, or otherwise furnishing any such
information to or with any person whose employment involves any of
respondent's businesses. Such personnel shall also execute
confidentiality agreements prohibiting the disclosure of any
Material Confidential Information of the Hold Separate Assets.
o. During the period commencing on the date this Agreement is
effective and [[Page 27301]] terminating on the earlier of (i)
twelve (12) months after the date the Consent Order becomes final,
or (ii) the date contemplated by subparagraph 2.b (the ``Initial
Divestiture Period''), respondent shall make available for use by
the New Company funds sufficient to perform all necessary routine
maintenance to, and replacement of, the Hold Separate Assets
(``normal repair and replacement''). Provided, however, that in any
event, respondent shall provide the New Company with such funds as
are necessary to maintain the viability, competitiveness, and
marketability of such Assets.
p. Columbia/HCA shall circulate, to its management employees
responsible for the operation of acute care hospitals in any of the
relevant areas defined in the Consent Order in this matter, a notice
of this Hold Separate and Consent Order in the form attached as
Attachment A.
q. The New Board shall serve at the cost and expense of
Columbia/HCA. Columbia/HCA shall indemnify the New Board against any
losses or claims of any kind that might arise out of its involvement
under this Hold Separate, except to the extent that such losses or
claims result from misfeasance, gross negligence, willful or wanton
acts, or bad faith by the New Board directors.
r. The NEw Board shall have access to and be informed about all
companies who inquire about, seek, or propose to buy any Hold
Separate Asset.
s. Within thirty days (30) after the date this Agreement is
accepted by the Commission and every thirty (30) days thereafter
until this Agreement terminates, the New Board shall report in
writing to the Commission concerning the New Board's efforts to
accomplish the purposes of this Hold Separate. In addition, within
thirty days (30) after the date this Agreement is accepted by the
Commission and every thirty (30) thereafter until this Agreement
terminates, respondent shall file with the Commission a verified
written report, setting forth, among other things that may be
required from time to time, a detailed memorialization of all
communications, both intra-company and with third parties, relating
to the termination of the SSH Joint Venture.
4. Should the Commission seek in any proceeding to compel
respondent to divest any of the Hold Separate Assets, as provided in
the Consent Order, or to seek any other injunctive or equitable
relief for any failure to comply with the Consent Order or this
Agreement, or in any way relating to the Acquisition, as defined in
the draft of complaint, respondent shall not raise any objection
based upon the expiration of the applicable Hart-Scott-Rodino
Antitrust Improvements Act waiting period or the fact that the
Commission has permitted the Acquisition. Respondent also waives all
rights to contest the validity of this Agreement.
5. To the extent that this Agreement requires respondent to
take, or prohibits respondent from taking, certain actions that
otherwise may be required or prohibited by contract, respondent
shall abide by the terms of this Agreement or the Consent Order and
shall not assert as a defense such contract requirements in a civil
penalty action brought by the Commission to enforce the terms of
this Agreement or Consent Order.
6. For the purposes of determining or securing compliance with
this Agreement, and subject to any legally recognized privilege, and
upon written request with reasonable notice to respondent made to
its principal office, respondent shall permit any duly authorized
representatives of the Commission:
a. Access, during office hours of respondent and in the presence
of counsel, to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and all other records and documents in
the possession or under the control of the respondent relating to
compliance with this Agreement;
b. Upon five (5) days' notice to respondent and without
restraint or interference from respondent, to interview officers,
directors, or employees of respondent, who may have counsel present,
regarding such matters.
7. This Agreement shall not be finding until approved by the
Commission.
Attachment A--Notice of Divestiture and Requirement for Confidentiality
Columbia/HCA Healthcare Corporation and Healthtrust Inc.--The
Hospital Company have entered into a Consent Agreement and Agreement
to Hold Separate with the Federal Trade Commission relating to the
divestiture of certain Healthtrust and Columbia/HCA acute care
hospitals and the termination of a joint venture agreement
(``Assets''). The hospitals to be divested include:
1. Santa Rosa Medical Center, 1450 Berryhill Road, Milton,
Florida 32572.
2. North Okaloosa Medical Center, 151 Redstone Avenue Southeast,
Crestview, Florida 32536.
3. Denton Regional Medical Center, 4405 North Interstate 35,
Denton, Texas 76207 or the Denton Community Hospital, 107 N. Bonnie
Brae, Denton, Texas 76201.
4. Ville Platte Medical Center, 800 East Main Street, Ville
Platte, Louisiana 70586.
5. Davis Hospital and Medical Center, 1600 West Antelope Drive,
Layton, Utah 84041.
6. Pioneer Valley Hospital, 3460 South Pioneer Parkway, West
Valley City, Utah 84120, including the Salt Lake Industrial Clinic,
441 S. Redwood Road, Salt Lake City, Utah 84104.
7. Jordan Valley Hospital, 3580 West 9000 South, West Jordan,
Utah 84088.
The joint venture agreement that must be terminated involves the
joint venture that owns South Seminole Hospital in Longwood,
Florida. Columbia/HCA and Healthtrust must terminate the joint
venture either by selling Healthtrust's interest in the joint
venture or by acquiring the other joint venture partner's interest.
Until after the FTC's Order becomes final and the Assets are
divested, the Assets must be managed and maintained as separate,
ongoing businesses, independent of all other Columbia/HCA
businesses. All competitive information relating to the Assets must
be retained and maintained by the persons involved in the operation
of the Assets on a confidential basis, and such persons shall be
prohibited from providing, discussing, exchanging, circulating, or
otherwise furnishing any such information to or with any other
person whose employment involves any other Columbia/HCA business.
Similarly, all such persons involved in Columbia/HCA shall be
prohibited from providing, discussing, exchanging, circulating, or
otherwise furnishing any such information to or with any other
person whose employment involves any of the Assets.
Any violation of the Consent Agreement or the Agreement to Hold
Separate, incorporated by reference as part of the Consent Order,
may subject Columbia/HCA to civil penalties and other relief as
provided by law.
Appendix II--Agreement to Hold Separate Regarding the Utah Healthtrust
Assets
In the matter of Columbia/HCA Healthcare Corporation, a
corporation. File No. 951-0022.
This Agreement to Hold Separate Regarding the Utah Healthtrust
Assets (``Agreement'') is by and between Columbia/HCA Healthcare
Corporation (``Columbia/HCA'' or ``respondent''), a corporation
organized, existing, and doing business under and by virtue of the
laws of the State of Delaware, with its principal place of business
at One Park Plaza, Nashville, Tennessee 37203; and the Federal Trade
Commission (``Commission''), an independent agency of the United
States Government, established under the Federal Trade Commission
Act of 1914, 15 U.S.C. 41, et seq.
Premises
Whereas, on October 4, 1994, Columbia/HCA and Healthtrust Inc.--
The Hospital Company (``Healthtrust'') entered into an agreement
whereby Columbia/HCA will acquire all the stock of Healthtrust, a
wholly-owned subsidiary of Columbia/HCA will be merged with and into
Healthtrust, and Healthtrust will operate as a wholly-owned
subsidiary of Columbia (the ``Acquisition''); and
Whereas, on October 20, 1994, the Commission, with the consent
of Healthtrust, issued its complaint and made final its Order to
settle charges that the acquisition by Healthtrust of certain assets
of Holy Cross Health System Corporation violated Section 7 of the
Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal
Trade Commission Act, as amended, 15 U.S.C. 45 (In the Matter of
Healthtrust, Inc.--The Hospital Company, Docket No. C-3538); and
Whereas, the Order in Docket No. C-3538 provides that for a
period of ten (10) years, Healthtrust shall not permit any acute
care hospital it operates in the Three-County Area of Utah, as
defined in Paragraph I.G. of the Order in Docket No. C-3538, to be
acquired, without the prior approval of the Commission, by any
person that operates any other acute care hospital in the Three-
County Area; and
Whereas, on February 15, 1995, Healthtrust petitioned the
Commission to approve the sale of four Healthtrust acute care
hospitals (the ``Utah Healthtrust Hospitals'') to Columbia/HCA; and
Whereas, Columbia/HCA, with its principal place of business at
One Park Plaza, [[Page 27302]] Nashville, Tennessee 37203, owns and
operates, among other things, acute care hospitals in the Three-
County Area of Utah, and elsewhere; and
Whereas, the Commission is now investigating the Acquisition to
determine whether it would violate any of the statutes enforced by
the Commission and whether the Commission should approve the
Acquisition pursuant to the Order in In the Matter of Healthtrust,
Inc.--The Hospital Company, Docket No. C-3538); and
Whereas, the Commission has determined to grant Healthtrust the
prior approval required for its sale of the Utah Healthtrust
Hospitals to Columbia/HCA, conditioned, however, upon Columbia/HCA
divesting, as required by the Agreement Containing Consent Order
(``Consent Agreement'' or ``Consent Order''), to which this Hold
Separate is attached and made a part thereof as Appendix II, three
Utah hospitals and related assets (the ``Schedule B Assets'' as
defined in Paragraph I of the Consent Order); and
Whereas, if the Commission accepts the Consent Order, which
would require the divestiture of the Schedule B Assets pursuant to
Paragraph IV of the Consent Order, the Commission must place the
Consent Order on the public record for a period of at least sixty
(60) days and may subsequently withdraw such acceptance pursuant to
the provisions of Section 2.34 of the Commission's Rules; and
Whereas, the Commission is concerned that if an understanding is
not reached, preserving the status quo ante of the Utah Healthtrust
Assets, as identified in Schedule C to the Consent Order, during the
period prior to the final acceptance and issuance of the Consent
Order by the Commission (after the 60-day public comment period),
divestitures resulting from any proceeding challenging the legality
of the Acquisition might not be possible, or might be less than an
effective remedy; and
Whereas, if the Commission accepts the Consent Order, and
Columbia/HCA has not divested with the Commission's prior approval,
each Schedule B Asset, in accordance with the Consent Order, within
nine (9) months of the date the Commission conditionally approves
the Acquisition pursuant to the order in Docket No. C-3538, the
Commission may appoint a trustee to divest the Utah Healthtrust
Assets, as identified in Schedule C to the Consent Order; and
Whereas, the Commission is concerned that if the Acquisition is
consummated, it will be necessary to preserve the Commission's
ability to require the divestitures of the Utah Healthtrust Assets
and the Commission's right to have the Utah Healthtrust Assets
continue as viable acute care hospitals independent of Columbia/HCA;
and
Whereas, the purposes of this Agreement and the Consent Order
are to:
(i) preserve the Utah Healthtrust Assets as viable, competitive,
and ongoing acute care hospitals, independent of Columbia/HCA,
pending the divestitures of the Schedule B Assets or the Utah
Healthtrust Assets as required under the terms of the Consent Order;
and
(ii) prevent interim harm to competition from the operation of
the Utah Healthtrust Assets pending divestitures of the Schedule B
Assets or the Utah Healthtrust Assets as required under the terms of
the Consent Order; and
(iii) remedy any anticompetitive effects of the Acquisition;
Whereas, respondent's entering into this Agreement shall in no
way be construed as an admission by respondent that the Acquisition
is illegal; and
Whereas, respondent understands that no act or transaction
contemplated by this Agreement shall be deemed immune or exempt from
the provisions of the antitrust laws or the Federal Trade Commission
Act by reason of anything contained in this Agreement.
Now, therefore, the parties agree, upon understanding that the
Commission has not yet determined whether the Acquisition will be
challenged, and in consideration of the Commission's conditional
approval of the Acquisition and its agreement that, at the time it
accepts the Consent Order for public comment it will grant early
termination of the Hart-Scott-Rodino waiting period, and unless the
Commission determines to reject the Consent Order, it will not seek
further relief from respondent with respect to the Acquisition,
except that the Commission may exercise any and all rights to
enforce this Agreement and the Consent Order to which it is annexed
and made a part thereof, and the Order in Docket No. C-3538, and in
the event the required divestitures of the Schedule B Assets are not
accomplished, to appoint a trustee to seek divestitures of the Utah
Healthtrust Assets pursuant to the Consent Order, to seek civil
penalties, to seek a court appointed trustee, and/or to seek other
equitable relief, as follows:
1. Respondent agrees to execute the Agreement Containing Consent
Order and be bound by the attached Consent Order.
2. Respondent agrees that from the date this Agreement is
accepted until the earliest of the dates listed in subparagraphs 2.a
or 2.b, it will comply with the provisions of paragraph 3 of this
Agreement:
a. three (3) business days after the Commission withdraws its
acceptance of the Consent Order pursuant to the provisions of
Section 2.34 of the Commission's Rules; or
b. the day after the last of the divestitures of the Schedule B
Assets or the Utah Healthtrust Assets, as required by the Consent
Order, is completed.
3. To ensure the complete independence and viability of the Utah
Healthtrust Assets, and to assure that no competitive information is
exchanged between Columbia/HCA and the managers of the Utah
Healthtrust Assets, respondent shall hold the Utah Healthtrust
Assets, as they are presently constituted, separate and apart on the
following terms and conditions:
a. The Utah Healthtrust Assets, as they are presently
constituted, shall be held separate and apart and shall be managed
and operated independently of respondent (meaning here and
hereinafter, Columbia/HCA excluding the Utah Healthtrust Assets),
except to the extent that respondent must exercise direction and
control over such assets to assure compliance with this Agreement or
the Consent Order, and except as otherwise provided in this
Agreement.
b. Prior to, or simultaneously with the Acquisition, respondent
shall transfer all ownership and control of all Utah Healthtrust
Assets to HTI of Utah, Inc.
c. The board of directors of HTI of Utah, Inc. (``HTI Board''),
shall have three members. Respondent shall elect the members of the
HTI Board. The HTI Board shall consist of the following three
persons: (i) Kent H. Wallace; (ii) Kenneth W. Perry; and (iii) David
C. Colby, provided they agree, or comparable, knowledgeable persons.
The Chairman of the HTI Board shall be Kent H. Wallace, provided he
agrees, or a comparable knowledgeable person, who shall remain
independent of Columbia/HCA and competent to assure the continued
viability and competitiveness of the Healthtrust Utah Assets. The
HTI Board shall include no more than one member who is a director,
officer, employee, or agent of respondent, who shall be David C.
Colby, provided he agrees, or a comparable, knowledgeable person
(``the respondent's HTI Board member''). The HTI Board shall meet
monthly during the course of the Hold Separate, and as otherwise
necessary. Meetings of the HTI Board during the term of this
Agreement shall be audiographically transcribed and the tapes
retained for two (2) years after the termination of this Agreement.
d. Respondent shall not exercise direction or control over, or
influence directly or indirectly, the Utah Healthtrust Assets, the
independent Chairman of the Board of the HTI of Utah Inc., HTI of
Utah Inc., or any of its operations or businesses; provided,
however, that respondent may exercise only such direction and
control over HTI of Utah Inc. as is necessary to assure compliance
with this Agreement or the Consent Order, or with all applicable
laws.
e. Respondent shall maintain the viability, competitiveness, and
marketability of the Utah Healthtrust Assets, shall not sell,
transfer, or encumber said Assets (other than in the normal course
of business); and shall not cause or permit the destruction,
removal, wasting, or deterioration, or otherwise impair their
viability, competitiveness, or marketability of said Assets.
f. Except for the respondent's HTI Board member, respondent
shall not permit any director, officer, employee, or agent of
respondent to also be a director, officer, or employee of HTI of
Utah Inc.
g. HTI Utah of Utah Inc. shall be staffed with sufficient
employees to maintain the viability and competitiveness of the Utah
Healthtrust Assets, which employees shall be selected from the
existing employee base of each facility or entity and may also be
hired from sources other than these facilities and entities.
h. With the exception of the respondent's HTI Board Member,
respondent shall not change the composition of the HTI Board unless
the independent Chairman consents. The independent Chairman shall
have power to remove members of the HTI Board for cause and to
require respondent to appoint replacement members to the New Board
as provided in Paragraph 3.c. Respondent shall [[Page 27303]] not
change the composition of the management of HTI of Utah Inc., except
that the HTI Board shall have the power to remove management
employees for cause.
i. If the independent Chairman ceases to act or fails to act
diligently, a substitute Chairman shall be appointed in the same
manner as provided in Paragraph 3.c of this Agreement.
j. Except as required by law, and except to the extent that
necessary information is exchanged in the course of evaluating the
Acquisition, defending investigations, defending or prosecuting
litigation, obtaining legal advice, negotiating agreements to divest
assets, or complying with this Agreement or the Consent Order,
respondent shall not receive or have access to, or use or continue
to use, any Material Confidential Information not in the public
domain about HTI of Utah Inc., or the activities of or the hospitals
operated by the HTI Board. Nor shall HTI of Utah Inc. or the HTI
Board receive or have access to, or use or continue to use, any
Material Confidential Information not in the public domain about
respondent and relating to respondent's acute care hospitals.
Respondent may receive, on a regular basis, aggregate financial
information relating to HTI of Utah Inc. necessary and essential to
allow respondent to prepare United States consolidated financial
reports, tax returns, and personnel reports. Any such information
that is obtained pursuant to this subparagraph shall be used only
for the purposes set forth in this subparagraph. (``Material
Confidential Information,'' as used herein, means competitively
sensitive or proprietary information not independently known to an
entity from sources other than the entity to which the information
pertains, and includes, but is not limited to, customer lists, price
lists, marketing methods, patents, technologies, processes, or other
trade secrets.)
k. Except as permitted by this Agreement, the respondent's HTI
Board member shall not, in his or her capacity as an HTI Board
member, receive Material Confidential Information and shall not
disclose any such information received under this Agreement to
respondent, or use it to obtain any advantage for respondent. The
respondent's HTI Board member shall enter a confidentiality
agreement prohibiting disclosure of Material Confidential
Information. The respondent's HTI Board member shall participate in
matters that come before the HTI Board only for the limited purposes
of considering a capital investment or other transaction exceeding
$250,000, approving any proposed budget and operating plans, and
carrying out respondent's responsibilities under this Agreement and
the Consent Order. Except as permitted by this Agreement, the
respondent's HTI Board member shall not participate in any matter,
or attempt to influence the votes of the other members of the HTI
Board with respect to matters, that would involve a conflict of
interest if respondent and HTI of Utah Inc. were separate and
independent entities.
l. Any material transaction of HTI of Utah Inc. that is out of
the ordinary course of business must be approved by a majority vote
of the HTI Board; provided that HTI of Utah Inc. shall engage in no
transaction, material or otherwise, that is precluded by this
Agreement.
m. If necessary, respondent shall provide HTI of Utah Inc. with
sufficient working capital to operate the Utah Healthtrust Assets at
their respective current rates of operation and to carry out any
capital improvement plans for the Utah Healthtrust Assets that have
already been approved.
n. Columbia/HCA shall continue to provide the same support
services to the Utah Healthtrust Assets, as are being provided to
such Assets by Healthtrust as of the date this Agreement is signed.
Columbia/HCA may charge the HTI of Utah Inc. the same fees, if any,
charged by Healthtrust for such support services as of the date of
this Agreement. Columbia/HCA personnel providing such support
services must retain and maintain all material confidential
information of the Utah Healthtrust Assets on a confidential basis,
and, except as is permitted by this Agreement, such persons shall be
prohibited from providing, discussing, exchanging, circulating, or
otherwise furnishing any such information to or with any person
whose employment involves any of respondent's businesses. Such
personnel shall also execute confidentiality agreements prohibiting
the disclosure of any Material Confidential Information of the Utah
Healthtrust Assets.
o. During the period commencing on the date this Agreement is
effective and terminating on the earlier of (i) twelve (12) months
after the date the Consent Order becomes final, or (ii) the date
contemplated by subparagraph 2.b (the ``Initial Divestiture
Period''), respondent shall make available for use by HTI of Utah
Inc. funds sufficient to perform all necessary routine maintenance
to, and replacements of, the Utah Healthtrust Assets (``normal
repair and replacement''). Provided, however, that in any event,
respondent shall provide HTI of Utah Inc. with such funds as are
necessary to maintain the viability, competitiveness, and
marketability of such Assets.
p. Columbia/HCA shall circulate, to its management employees
responsible for the operation of acute care hospitals in any of the
relevant areas defined in the Consent Order in this matter, a notice
of this Hold Separate and Consent Order in the form attached as
Attachment A.
q. The HTI Board shall serve at the cost and expense of
Columbia/HCA. Columbia/HCA shall indemnify the HTI Board against any
losses or claims of any kind that might arise out of its involvement
under this Hold Separate, except to the extent that such losses or
claims result from misfeasance, gross negligence, willful or wanton
acts, or bad faith by the HTI Board directors.
r. The HTI Board shall have access to and be informed about all
companies who inquire about, seek, or propose to buy any Schedule B
Assets or the Utah Healthtrust Assets.
s. Within thirty (30) days after the date this Agreement is
accepted by the Commission and every thirty (30) days thereafter
until this Agreement terminates, the HTI Board shall report in
writing to the Commission concerning the HTI Board's efforts to
accomplish the purposes of this Hold Separate.
4. Should the Commission seek in any proceeding to compel
respondent to divest any of the Schedule B Assets or the Utah
Healthtrust Assets, as provided in the Consent Order, or to seek any
other injunctive or equitable relief for any failure to comply with
the Consent Order or this Agreement, or in any way relating to the
acquisition, as defined in the draft of complaint, respondent shall
not raise any objection based upon the expiration of the applicable
Hart-Scott-Rodino Antitrust Improvements Act waiting period or the
fact that the Commission has permitted the Acquisition. Respondent
also waives all rights to contest the validity of this Agreement.
5. To the extent that this Agreement requires respondent to
take, or prohibits respondent from taking, certain actions that
otherwise may be required or prohibited by contract, respondent
shall abide by the terms of this Agreement or the Consent Order and
shall not assert as a defense such contract requirements in a civil
penalty action brought by the Commission to enforce the terms of
this Agreement or Consent Order.
6. For the purposes of determining or securing compliance with
this Agreement, and subject to any legally recognized privilege, and
upon written request with reasonable notice to respondent made to
its principal office, respondent shall permit any duly authorized
representatives of the Commission:
a. Access, during office hours of respondent and in the presence
of counsel, to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and all other records and documents in
the possession or under the control of the respondent relating to
compliance with this Agreement;
b. Upon five (5) days' notice to respondent and without
restraint or interference from respondent, to interview officers,
directors, or employees of respondent, who may have counsel present,
regarding such matters.
7. This Agreement shall not be binding until approved by the
Commission.
Attachment A--Notice of Divestiture and Requirement for Confidentiality
Columbia/RCA Healthcare Corporation and Healthtrust Inc.--The
Hospital Company have entered into a Consent Agreement and Agreement
to Hold Separate with the Federal Trade Commission relating to the
divestiture of certain Healthtrust and Columbia/HCA acute care
hospitals and the termination of a joint venture agreement
(``Assets''). The hospitals to be divested include:
1. Santa Rosa Medical Center, 1450 Berryhill Road, Milton,
Florida 32572.
2. North Okaloosa Medical Center, 151 Redstone Avenue Southeast,
Crestview, Florida 32536.
3. Denton Regional Medical Center, 4405 North Interstate 35,
Denton, Texas 76207 or the Denton Community Hospital, 107 N. Bonnie
Brae, Denton, Texas 76201.
4. Ville Platte Medical Center, 800 East Main Street, Ville
Platte, Louisiana 70586.
5. Davis Hospital and Medical Center, 1600 West Antelope Drive,
Layton, Utah 84041. [[Page 27304]]
6. Pioneer Valley Hospital, 3460 South Pioneer Parkway, West
Valley City, Utah 84120, including the Salt Lake Industrial Clinic,
441 S. Redwood Road, Salt Lake City, Utah 84104.
7. Jordan Valley Hospital, 3580 West 9000 South, West Jordan,
Utah 84088.
The joint venture agreement that must be terminated involves a
joint venture that owns South Seminole Hospital in Longwood,
Florida. Columbia/HCA and Healthtrust must terminate the joint
venture either by selling Healthtrust's interest in the joint
venture or by acquiring the other joint venture partner's interest.
Until after the FTC's Order becomes final and the Assets are
divested, the Assets must be managed and maintained as separate,
ongoing businesses, independent of all other Columbia/HCA
businesses. All competitive information relating to the Assets must
be retained and maintained by the persons involved in the operation
of the Assets on a confidential basis, and such persons shall be
prohibited from providing, discussing, exchanging, circulating, or
otherwise furnishing any such information to or with any other
person whose employment involves any other Columbia/HCA business.
Similarly, all such persons involved in Columbia/HCA shall be
prohibited from providing, discussing, exchanging, circulating, or
otherwise furnishing any such information to or with any other
person whose employment involves any of the Assets.
Any violation of the Consent Agreement or the Agreement to Hold
Separate, incorporated by reference as part of the Consent Order,
may subject Columbia/HCA to civil penalties and other relief as
provided by law.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted,
subject to final approval, a proposed consent order from Columbia/
HCA Healthcare Corporation (``Columbia/HCA''). The agreement is
designed to remedy anticompetitive effects stemming from Columbia/
HCA's proposed acquisition of Healthtrust, Inc.--The Hospital
Company (``Healthtrust'').
The proposed consent order has been placed on the public record
for sixty days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty days, the Commission will again review the
agreement and the comments received and will decide whether it
should withdraw from the agreement or make final the agreement's
proposed order.
Columbia/HCA and Healthtrust both own and/or operate acute care
hospitals in various localities around the country. The Commission's
draft complaint accompanying the proposed consent order charges that
on or about October 4, 1994, Columbia/HCA agreed to acquire all the
stock of Healthtrust, and that the Commission has reason to believe
that the acquisition, as well as the agreement to enter into the
acquisition, may substantially lessen competition, in violation of
Section 7 of the Clayton Act and Section 5 of the FTC Act.
According to the draft complaint, the proposed acquisition may
have an anticompetitive impact upon competition for acute care
hospital services in six localities (``relevant areas'') where
Columbia/HCA and Healthtrust are direct competitors. The complaint
alleges that the acute care hospital services market in each area is
already highly concentrated, and entry by new competitors would be
difficult. The complaint alleges that the Commission has reason to
believe that the acquisition would violate Section 7 of the Clayton
Act and Section 5 of the Federal Trade Commission Act, unless an
effective remedy eliminates the anticompetitive effects. The
relevant areas in which the complaint alleges the acquisition may
lessen competition, and the hospitals Columbia/HCA and Healthtrust
own and/or operate in each relevant area, are as follows:
(1) The Pensacola area, which encompasses the Florida counties
of Escambia and Santa Rosa. Columbia/HCA's acute care hospital in
this area is the West Florida Regional Medical Center, in Pensacola;
and Healthtrust's acute care hospital in this area is the Santa Rosa
Medical Center, in Milton.
(2) The Okaloosa area, which encompasses the Florida county of
Okaloosa. Columbia/HCA's acute care hospitals in this area are Twin
Cities Hospital, in Niceville; Fort Walton Beach Medical Center, in
Ft. Walton Beach; and Destin Community Hospital, in Destin.
Healthtrust's acute care hospital in this area is North Okaloosa
Medical Center, in Crestview.
(3) The Denton area, encompassing the Texas counties of Cooke
and Denton (excluding the incorporated city of Lewisville and that
portion of Denton County south of Texas highway number 121).
Columbia/HCA's acute care hospital in this area is Denton Community
Hospital, in Denton; and Healthtrust's acute care hospital in this
area is Denton Regional Medical Center, also in Denton.
(4) The Ville Platte-Mamou-Opelousas area, encompassing the
Louisiana parishes of Evangeline and St. Landry. Columbia/HCA's
acute care hospital in this area is the Ville Platte Medical Center,
in Ville Platte; and Healthtrust's acute care hospitals in this area
are Savoy Medical Center, in Savoy, and Doctors Hospital of
Opelousas, in Opelousas.
(5) The Salt Lake City--Ogden Metropolitan Statistical Area
(``MSA''), encompassing three contiguous counties in northern Utah:
Weber County, Davis County, and Salt Lake County. This area includes
the Salt Lake City area (encompassing Salt Lake County and southern
Davis County) and the Ogden area (encompassing Weber County and
northern Davis County). Columbia/HCA's acute care hospitals in the
MSA are Davis Hospital and Medical Center, in Layton, and St. Mark's
Hospital, in Salt Lake City. Healthtrust's acute care hospitals in
the MSA are Pioneer Valley Hospital, in West Valley City; Jordan
Valley Hospital, in West Jordan; Lakeview Hospital, in Bountiful;
and Ogden Regional Medical Center, in Ogden.
(6) The Orlando area, encompassing the Florida counties of
Seminole, Orange, and Osceola. Columbia/HCA's acute care hospitals
in this area are Central Florida Regional Hospital, in Sanford;
Columbia Park Medical Center, in Orlando; Osceola Regional Hospital,
in Kissimmee; and Winter Park Memorial Hospital, in Winter Park.
Healthtrust's acute care hospital in this area is South Seminole
Hospital, in Lakewood. The complaint further alleges that South
Seminole Hospital is jointly owned by Healthtrust and the Orlando
Regional Health System (``ORHS''), and that ORHS operates four
additional hospitals in the Orlando area.
Healthtrust is subject to a prior Commission order issued in
Healthtrust, Inc.--The Hospital Company, Docket No. C-3538. Under
that order, Healthtrust must obtain prior Commission approval before
transferring its hospitals in the Salt Lake City area to anyone who
operates other hospitals in that relevant area. Healthtrust
requested the Commission's prior approval to transfer its hospitals
in the Salt Lake City area to Columbia/HCA, and the Commission
granted that approval at the same time it accepted this consent
agreement with Columbia/HCA for public comment.
The consent order, if issued in final form by the Commission,
would settle charges that the acquisition many substantially lessen
competition in the six relevant areas. The order contains provisions
requiring divestiture by Columbia/HCA of the following acute care
hospitals, in five of the relevant areas:
(1) The Pensacola area--Healthtrust's Santa Rosa Medical Center,
in Milton;
(2) The Okaloosa area--Healthtrust's North Okaloosa Medical
Center, in Crestview;
(3) The Denton area--Healthtrust's Denton Regional Medical
Center, in Denton, or in the alternative, Columbia/HCA's Denton
Community Hospital, also in Denton;
(4) The Ville Platte-Mamou-Opelousas area--Columbia's Ville
Platte Medical Center, in Ville Platte; and
(5) The Salt Lake City--Ogden MSA--Columbia/HCA's Davis Hospital
and Medical Center, in Layton, and Healthtrust's Pioneer Valley
Hospital, in West Valley City and Jordan Valley Hospital, in West
Jordan.
The purpose of these hospital divestitures is to maintain the
scope and intensity of competition among general acute care
hospitals in each of the foregoing areas, as existed before the
acquisition.
In addition, in the Orlando area, Columbia must terminate the
joint venture with ORHS in the South Seminole Hospital, in Lakewood,
either by buying out the co-venturer's interest, or by selling
Healthtrust's interest in the venture. The purpose of the
divestiture in the Orlando area is to prevent two major competitors,
Columbia/HCA and ORHS, from sharing ownership of the South Seminole
Hospital.
The proposed order requires Columbia/HCA to obtain the approval
of the Commission for the divestiture of the hospitals in the
relevant areas. Under the terms of the order, the required
divestitures in four of the areas, the Pensacola area, the Okaloosa
area, the Denton area, and the Ville Platte-Mamou-Opelousas area,
must be completed within twelve months of the date the order becomes
final. In the Salt Lake City-Ogden MSA, Columbia/HCA must divest the
identified hospitals within nine months of the date the Commission
granted [[Page 27305]] prior approval for Healthtrust to transfer
its hospitals to Columbia/HCA. In the Orlando area, Columbia/HCA
must terminate Healthtrust's participation in the South Seminole
Hospital within six months of the date the order becomes final.
If the required divestitures in the Pensacola area, the Okaloosa
area, the Denton area, and the Ville Platte-Mamou-Opelousas area,
are not completed within twelve months, Columbia/HCA would consent
to the appointment of a trustee, who would have twelve additional
months to effect the divestitures. If the required divestitures in
the Salt Lake City-Ogden MSA are not completed within nine months,
Columbia/HCA would consent to the appointment of a trustee, who
would have twelve months to sell all the Utah assets of Healthtrust,
including all the Healthtrust hospitals in Utah. If the joint
venture in Orlando is not terminated within six months, Columbia/HCA
would consent to the appointment of a trustee, who would have twelve
months to sell Healthtrust's interest in the joint venture.
The two hold-separate agreements executed in conjunction with
the consent agreement require Columbia/HCA, until the completion of
the divestitures or as otherwise specified, to hold separate and
preserve the assets and businesses necessary to insure the viability
and marketability of the assets to be divested, including all of
Healthtrust's assets in the state of Utah. The proposed order
provides that approval by the Commission of the divestitures shall
be conditioned upon the agreement by the acquirers that, for ten
years from the date of the divestiture, it will not sell, without
the prior approval of the Commission, to another person operating
(or in the process of acquiring) any acute care hospital in the same
relevant area.
The order would prohibit Columbia/HCA from acquiring any acute
care hospital in any of the six relevant areas without the prior
approval of the Federal Trade Commission. It would also prohibit
Columbia/HCA from transferring, without prior Commission approval,
any acute care hospital it operates in any relevant area to another
person operating (or in the process of acquiring) an acute care
hospital in the same relevant area. These provisions, in
combination, would give the Commission authority to prohibit any
substantial combination of the acute care hospital operations of
Columbia/HCA with those of any other acute care hospital in the same
relevant area, unless Columbia/HCA convinced the Commission that a
particular transaction would not endanger competition in that
relevant area. The provisions would not apply to acquisitions or
sales where the value of the transferred assets is $1 million or
less, and the provisions would expire ten years after the order
becomes final.
For ten years, the order would prohibit Columbia/HCA from
transferring all or any substantial part of any acute care hospital
in any relevant area to another party without first filing with the
Commission an agreement by the transferee to be bound by the order.
The purpose of this analysis is to invite public comment
concerning the proposed order, to assist the Commission in its
determination whether to make the order final. This analysis is not
intended to constitute an official interpretation of the agreement
and order or to modify their terms in any way.
The agreement is for settlement purposes only and does not
constitute an admission by Columbia/HCA that its proposed
acquisition would have violated the law, as alleged in the
Commission's complaint.
Donald S. Clark,
Secretary.
[FR Doc. 95-12589 Filed 5-22-95; 8:45 am]
BILLING CODE 6750-01-M
