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Indiana Lawmakers Seek To Forbid Hospital Monopolies, but One Merger Fight Remains

Last updated: March 19, 2025 5:00 am
Oliver James
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9 Min Read
Indiana Lawmakers Seek To Forbid Hospital Monopolies, but One Merger Fight Remains
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Union Health is making a new bid to Indiana regulators to buy its rival hospital in Terre Haute as the door looks poised to close on such deals.

The nonprofit health system is trying to leverage an existing state law to acquire Terre Haute Regional Hospital, the only other acute care hospital in Vigo County. After withdrawing its initial application in November amid pushback, Union has shifted its pitch to emphasize what it describes as Regional’s “declining position” while offering more concrete promises, such as limits on price increases.

Union submitted its new application on Feb. 5 as Indiana lawmakers were attempting to nix such mergers in their state. Lawmakers then watered down a bill that threatened to forbid Union’s deal altogether, with the amended legislation now barring mergers sought after Feb. 15, leaving an opening for Union. That means the proposed merger will next face a showdown with the administration of Indiana’s new governor, which has signaled opposition to such deals.

Indiana is among the latest states reconsidering Certificate of Public Advantage laws that greenlight hospital monopolies. This year, Tennessee lawmakers introduced a bill to restructure state oversight of these mergers after an attempt last year to repeal its COPA law. In 2023, Maine repealed its COPA law, joining Minnesota, Montana, North Carolina, and North Dakota.

“I would hope that they are reconsidering the laws because of the research on the long-run harms of COPAs,” said Christopher Garmon, a University of Missouri-Kansas City economist who has studied COPA mergers.

Indiana is one of 19 states that still have COPA laws, which allow mergers that the Federal Trade Commission otherwise considers illegal because they reduce competition and often create monopolies.

In exchange for approval of these deals, the merging hospitals typically agree to meet conditions imposed by their state to mitigate the harms of a monopoly. But health care economists and the FTC have said that state oversight cannot replace competition and that these mergers ultimately harm patients.

Union pulled its application in November, just days before the state was due to rule on the deal.

When Union filed its new application in early February, this time it promised a slew of concrete commitments and pledges to improve residents’ health in the largely rural communities that surround Terre Haute. Among them were promises to keep both hospitals’ emergency rooms open and inpatient services in operation, and to tie increases in hospital charges to the consumer price index for medical care, essentially establishing a cap so charges don’t exceed medical inflation.

It also recast its pitch to describe Regional as a hospital in decline, which Union said puts the region at risk of losing access to services if the merger is not approved. Tennessee-based HCA Healthcare owns Terre Haute Regional.

In that scenario, Union warned, if Regional were to close, the health system would essentially have a monopoly anyway, “without any oversight, terms, or conditions” of a COPA. Instead, it argued, a green light from state regulators could avert a hospital closure and guarantee state oversight of the combined hospital system.

Union’s first application did not argue that the merger was necessary for Regional to remain viable. In public comments submitted in September and March, the FTC argued to state regulators that both hospitals are “financially stable,” adding that Regional is “part of the largest hospital system in the country with tremendous financial resources.” It also cited hospital financial reporting that showed Terre Haute Regional Hospital’s profits were better than those of most other hospitals in the country.

“This repackaged COPA application presents the same problems as before,” Clarke Edwards, acting director of the FTC’s Office of Policy Planning, said in a statement on March 17 after the commission unanimously opposed the merger.

HCA did not respond to questions about Union’s characterization that Regional is a hospital in decline.

Despite Union’s assurances that the merger would benefit the region, an analysis of the first proposal found the opposite. Zack Cooper, a health economist and an associate professor at Yale University, estimated that the price of care would rise by at least 10%, 500 jobs would be lost, and nurses’ pay would decline by at least 7%.

Despite the new application and new promises, “the nature of the deal hasn’t changed,” Cooper said. He said that his findings remain unchanged and that Union stands to benefit — not the community.

“Life is easier for a firm if you face less competition,” he said. “There’s less pressure to compete on quality. There’s less pressure to compete on price.”

In January, state Sen. Ed Charbonneau, a Republican and a key architect of Indiana’s 2021 COPA law, introduced the legislation to repeal the law, which would have foreclosed Union’s chance at a possible second attempt at the merger.

In February, seated side by side at a state Senate health committee hearing, Union Health CEO Steve Holman, Terre Haute Chamber of Commerce President Kristin Craig, and state Sen. Greg Goode, a Republican representing the region, testified against the bill.

Holman told lawmakers the merger would improve the health of the region. He also noted that the hospital system had already spent $3 million on legal fees pursuing the deal. He said it seemed like lawmakers were attempting to cripple Union’s chances. “Why has this come up now?” Holman asked.

The bill to repeal the COPA law advanced out of committee by a 7-4 vote. State Sen. Mike Bohacek, a Republican who represents a region a three-hour drive north of Terre Haute, said he voted against repealing the law out of deference to local officials.

“I have no dog in this fight,” Bohacek said.

Charbonneau later amended his bill, winning support from Union and Goode. The new version sailed through the Senate. It is now backed by two powerful Republican representatives in the House: Brad Barrett, chair of the Public Health Committee, and Bob Heaton, House majority whip. Heaton represents parts of Vigo County.

But Indiana’s new governor, Republican Mike Braun, took office in January vowing to crack down on consolidation, especially in health care.

Earlier this year, Braun tapped Gloria Sachdev to lead a newly created Cabinet position overseeing the state’s health care agencies, including the state Department of Health, which will decide on the merger.

As CEO of the Employers’ Forum of Indiana, a coalition of businesses that has combated high hospital prices, Sachdev was an outspoken critic of the proposed merger in Terre Haute. In an October opinion piece in The Indianapolis Star, she urged regulators to consider how these mergers can crush communities.

The state has until June 21 to review the merger application before rendering a decision, according to the Department of Health. The public can comment on the proposal through March 23.

Samantha Liss:
sliss@kff.org,
@samanthann

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