COLUMBIA — South Carolina's largest health care system terminated its agreement to purchase competing hospitals in Columbia and Camden.
Prisma Health and Tennessee-based LifePoint Health — owner of Providence Health hospitals in Columbia, KershawHealth in Camden and an emergency room in Fairfield County — entered a preliminary purchase agreement in March 2020. But the deal was plagued by legal challenges, causing the companies to call it quits April 9.
"While both parties anticipated that the acquisition would have a complex regulatory path, significant delays and challenges with the Federal Trade Commission and state regulatory authorities have made it prohibitive to move forward," the hospitals said in a joint statement.
Had the purchase been finalized, it would have taken the Columbia area down to two hospital systems — Prisma and Lexington Medical Center. And it would have made the state's largest system even larger, taking it to 3,263 patient beds across its Midlands and Upstate footprint, according to S.C. Department of Health and Environmental Control data.
By comparison, the Charleston-based Medical University of South Carolina — the second-largest provider in the Palmetto State, has half that number, with 1,600 beds across its system, according to its website.
It was Prisma and Providence’s competitor, Lexington Medical, that filed suit in S.C. Administrative Law Court, attempting to block the sale by alleging state regulators did not give it a proper review.
In its filings with the court, Prisma revealed that, under the purchase agreement, there was a clause stating the sale must go through by March 2, 2021, or it would lose the deal and $10 million in down payments. It was not clear from the hospitals’ joint statement whether that earnest money was forfeited.
Prisma had sought to shield itself from the stricter scrutiny of antitrust regulations and legal actions through a process called Certificate of Public Advantage, or COPA, which allows states to carve out exceptions to federal laws governing monopolies and business competition. The companies instead submit an annual report and make concessions to the state, which are often less heavy handed.
The Midlands arm of Prisma Health currently operates under a COPA formed in the 1990s when Baptist Hospital and Richland Memorial Hospital were joined to form Palmetto Health. Prisma wanted its purchase of the LifePoint hospitals simply to be added to that original COPA.
Buying Providence Health locations would have bolstered Prisma as it faces stiffer competition from rival hospital systems in the fast growing northeast sector of Columbia. Lexington Medical Center, which before now had stayed within the bounds of Lexington County, cut the ribbon on a new $80 million northeast medical center on March 9.
In the ongoing battle for market share, Lexington Medical faces legal challenges of its own, from Providence Health, that have prevented it from opening an outpatient surgery center and permanent MRI unit in its new location. Providence argues those services aren't needed, and therefore do not meet the state's legal threshold requiring a show of necessity, because its own northeast facility already provides them.
Lexington Medical Center declined to comment on the termination of the purchase deal between its competitors.