FTC Staff Warn Tennessee Legislature of Risks to Patients if Ballad Health COPA Expires and Support Proposed Repeal of Certificate of Need Requirements

Federal Trade Commission staff warned Tennessee legislators of the potential harm to patients if it passes proposed legislation that would terminate a Certificate of Public Advantage (COPA) that provides state regulatory oversight for Ballad Health.

The letter represents the latest effort by the FTC to lower healthcare costs, while improving quality and access to healthcare services for patients by promoting competition.

In a letter to Tennessee Rep. David Hawk, the directors of the FTC’s Office of Policy Planning and Bureaus of Competition and Economics warned of the potential anticompetitive consequences to patients—which include higher healthcare costs and lower quality of care—if House Bill 2278 and Senate Bill 2414 are enacted.

The bills would allow the Ballad Health COPA to expire in June 2028, ending the Tennessee Department of Health’s supervision over Ballad Health’s quality of healthcare services, availability and access to care, as well as population health initiatives.

While the FTC generally recommends that state lawmakers not enact new COPA laws and repeal existing COPA laws, repealing a COPA law or allowing a specific COPA to expire in the absence of competing healthcare systems enables a monopolist to exercise substantial market power unconstrained by state regulatory oversight or antitrust enforcement against merger-related harms, the FTC’s letter states.

The FTC had originally opposed Ballad Health’s COPA application, issuing several public comments and providing testimony opposing the merger that formed Ballad Health in 2018.

When COPAs expire, the risk of price and quality harms increase significantly, including harm to quality of care and availability of services, the FTC’s letter states.

Proposed Certificate of Need Removal 

In the same letter, FTC staff also commented on House Bill 819 and Senate Bill 1369 which would remove state approval requirements, known as Certificate of Need (CON) requirements, for acute care hospitals.

CON requirements typically require healthcare providers to obtain state approval before expanding, establishing new facilities or services, or making certain large capital expenditures.

Removing unnecessary CON regulatory barriers to facilitate the opening of new hospitals is consistent with recommendations in FTC staff’s prior advocacy, as well as the Trump Administration’s Rural Health Transformation program, the FTC’s letter states.

The potential opening of a new inpatient acute care hospital would be a positive step toward replacing the hospital competition that was lost in Northeast Tennessee because of the merger that formed Ballad Health.

However, the FTC’s letter raises concern over the timing of the CON law repeal bills, noting that the proposed bills may not take effect until 2030. This would create a two-year gap between the Ballad Health COPA expiration in 2028 and the removal of the CON requirement for acute care hospitals in 2030.

The letter encouraged the Tennessee General Assembly to consider the FTC’s research and previous advocacy efforts in deciding whether delaying the repeal of CON laws undermines the legislature’s goal of increasing competition.

Repealing the CON laws as soon as possible—and no later than the expiration of any COPA—would offer the promise of additional competition in Northeast Tennessee, the FTC’s letter further states.