FTC Staff Warn Tennessee Against Ending Ballad Health Oversight Before Hospital Competition Returns

What happened

Federal Trade Commission staff warned Tennessee lawmakers that proposed legislation allowing Ballad Health's state-supervised hospital monopoly arrangement to expire could harm patients through higher costs, lower quality and reduced access to care.

The staff letter addresses House Bill 2278 and Senate Bill 2414, which would let the Ballad Health Certificate of Public Advantage expire in June 2028. According to the FTC release, that would end Tennessee Department of Health supervision over Ballad Health's quality of care, availability and access to care, and population health initiatives.

The FTC generally recommends that states avoid new COPA laws and repeal existing ones, but staff said terminating a COPA without competing health systems can leave a monopolist with substantial market power unconstrained by state oversight or antitrust enforcement for merger-related harms. FTC staff also said COPA expiration can significantly increase risks of price and quality harms, including harms to quality of care and service availability.

The agency said it had previously opposed Ballad Health's COPA application and opposed the merger that formed Ballad Health in 2018 through public comments and testimony. The latest staff warning puts the agency in a narrower posture: opposing an unguarded end to an arrangement it also generally disfavors, unless competition can replace state supervision.

In the same letter, FTC staff addressed Tennessee House Bill 819 and Senate Bill 1369, which would remove Certificate of Need approval requirements for acute care hospitals. The release describes those requirements as state approval rules that providers typically must satisfy before expanding, establishing new facilities or services, or making certain large capital expenditures.

FTC staff said opening a new inpatient acute care hospital could help replace competition lost in Northeast Tennessee after the merger that formed Ballad Health. But staff raised concern that the CON repeal bills may not take effect until 2030, creating a two-year gap after the Ballad Health COPA expires in 2028.

The staff letter urged Tennessee lawmakers to consider whether delaying repeal of CON laws undermines the legislature's goal of increasing competition. FTC staff said repealing CON laws as soon as possible, and no later than any COPA expiration, would offer the promise of additional competition in Northeast Tennessee.