[Federal Register Volume 59, Number 184 (Friday, September 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23583]


[[Page Unknown]]

[Federal Register: September 23, 1994]


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FEDERAL TRADE COMMISSION
[File No. 941 0108]

 

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, the hospital company to complete its 
acquisition of Medical Care America, but would require it to divest the 
Alaska Surgery Center within twelve months to a Commission-approved 
entity. If the transaction is not completed in the designated time 
frame, the respondents would be required to permit the Commission to 
appoint a trustee. In addition, the consent agreement would require the 
respondent, for ten years, to obtain Commission approval before 
acquiring an interest worth more than $1 million in any outpatient 
surgical services facility in Anchorage, Alaska, and before selling 
such an interest to any entity that operates an outpatient surgical 
services facility in Anchorage, Alaska.

DATES: Comments must be received on or before November 22, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:
Mark Horoschak, FTC/S-3115, Washington, D.C. 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 Sec. 4.9(b)(6)(ii) of the Commission's Rules of 
Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order

    The Federal Trade Commission (``Commission''), having initiated an 
investigation into the proposed acquisition of Medical Care America, 
Inc. by Columbia/HCA Healthcare Corporation (``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 
and 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 officer and attorney, 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 the 
State of Delaware, with its office and principal place of business at 
201 West Main Street, Louisville, Kentucky, 40202.
    2. The proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint here attached.
    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 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 here attached, or 
that the facts as alleged in the draft 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 Sec. 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 here attached and its decision containing 
the following order to divest and to cease and desist, and other relief 
in disposition of the proceeding, 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 
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. 
The proposed respondent further understands that it may be liable for 
civil penalties in the amount provided by law for each violation of the 
order after it becomes final.

Order

I

    It is ordered That as used in this order, the following definitions 
shall apply:
    A. ``Respondent'' or ``Columbia/HCA'' means Columbia/HCA Healthcare 
Corporation, its partnerships, joint ventures, companies, subsidiaries, 
divisions, groups and affiliates controlled by Respondent, and their 
respective directors, officers, employees, agents, and representatives, 
and their respective successors and assigns.
    B. The ``Acquisition'' means the acquisition by Columbia/HCA of 
Medical Care America, Inc., including the Alaska Surgery Center.
    C. ``Outpatient surgery facility'' means a health facility which 
has as a function the provision of outpatient surgery services. 
Outpatient surgery facilities include general acute care hospitals that 
offer outpatient surgery services, as well as ambulatory surgery 
centers that are not part of a general acute care hospital. The term 
``outpatient surgery facility'' shall not include a physician's, other 
healthcare professional's, or group practice's office or offices that 
provide outpatient surgery services for use solely by that physician, 
healthcare professional, or group practice, so long as such facility is 
not licensed as an ambulatory surgical facility by the State of Alaska.
    D. ``Outpatient surgery services'' means facilities, personnel, and 
tools and equipment used by doctors in performing surgical procedures 
on patients who are not confined for more than 23 hours in an acute 
care hospital or other facility for recovery following the surgery. 
Outpatient surgery services include operating rooms, recovery rooms, 
surgical tools and devices, nurses, anesthesia equipment and personnel.
    E. To ``operate an outpatient surgery facility'' means to own, 
lease, manage, or otherwise control or direct the operations of an 
outpatient surgery facility, directly or indirectly.
    F. ``Affiliate'' means any entity whose management and policies are 
controlled in any way, directly or indirectly, by the person with which 
it is affiliated.
    G. ``Person'' means any natural person, partnership, corporation, 
company, association, trust, joint venture, or other business or legal 
entity, including any governmental agency.
    H. ``Commission'' means the Federal Trade Commission.
    I. ``Schedule A Assets'' means assets acquired by the respondent 
and listed on the attached Schedule A.
    J. ``Viability and competitiveness'' means that the Schedule A 
Assets are capable of functioning independently and competitively.
    K. ``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, cosigners, 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, absolutely and in good faith, within 
twelve (12) months of the date this order becomes final, the Schedule A 
Assets, and shall also divest such additional assets and businesses 
ancillary to the Schedule A Assets and effect such arrangements as are 
necessary to assure the marketability and the viability and 
competitiveness of the Schedule A Assets.
    B. Respondent shall divest the Schedule A Assets 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. The 
purpose of the divestiture of the Schedule A Assets is to ensure the 
continuation of the Schedule A Assets as an ongoing, viable outpatient 
surgery facility and to remedy the lessening of competition resulting 
from the Acquisition as alleged in the Commission's complaint.
    C. Respondent shall comply with all terms of the Agreement to Hold 
Separate, attached hereto and made a part hereof as Appendix I. Said 
Agreement shall continue in effect until such time as respondent has 
fulfilled the divestiture requirements of this order or until such 
other time as the Agreement to Hold Separate provides.
    D. Pending divestiture of the Schedule A Assets, respondent shall 
take such actions as are necessary to maintain the viability and 
competitiveness and the marketability of the Schedule A Assets, and to 
prevent the destruction, removal, wasting, deterioration, or impairment 
of any of the Schedule A Assets, except for ordinary wear and tear.
    E. A condition of approval by the Commission of the divestiture 
shall be a written agreement by the acquirer of the Schedule A Assets 
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, the Schedule A Assets to any person who operates, or will 
operate immediately following the sale, any other outpatient surgery 
facility in the Municipality of Anchorage, Alaska.

III

    It is further ordered That:
    A. If the respondent has not divested, absolutely and in good faith 
and with the Commission's prior approval, the Schedule A Assets, in 
accordance with this order, within twelve (12) months of the date this 
order becomes final, the Commission may appoint a trustee to divest the 
Schedule A Assets. 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 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 this paragraph 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.
    B. If a trustee is appointed by the Commission or a court pursuant 
to Paragraph III.A. 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 the Schedule A 
Assets.
    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 required by 
this order.
    4. The trustee shall have twelve (12) months from the date the 
Commission approves the trust agreement described in Paragraph III.B.3. 
to accomplish the divestiture, 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, 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. 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 
shall be made in the manner and to the acquirer as set out in Paragraph 
II of this order; provided, however, if the trustee receives bona fide 
offers from more than one acquiring entity, 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 Schedule A 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 III.A. 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 required by this order.
    11. The trustee shall have no obligation or authority to operate or 
maintain the Schedule A Assets.
    12. The trustee shall report in writing to the respondent and to 
the Commission every sixty (60) days concerning the trustee's efforts 
to accomplish divestiture.

IV

    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 outpatient surgery facility in the 
Municipality of Anchorage, Alaska;
    B. Acquire any assets used, or previously used, in the Municipality 
of Anchorage, Alaska (and still suitable for use) for operating an 
outpatient surgery facility from any person presently engaged in, or 
within the two years preceding such acquisition engaged in, operating 
an outpatient surgery facility in the Municipality of Anchorage, 
Alaska;
    C. Enter into any agreement or other arrangement to obtain direct 
or indirect ownership, management, or control of any outpatient surgery 
facility, or any part thereof, in the Municipality of Anchorage, 
Alaska, including but not limited to, a lease of or management contract 
for any such outpatient surgery facility;
    D. Acquire or otherwise obtain the right to designate directly or 
indirectly directors or trustees of any outpatient surgery facility in 
the Municipality of Anchorage, Alaska.
    E. Permit any outpatient surgery facility it operates in the 
Municipality of Anchorage, Alaska to be acquired by any person that 
operates, or will operate immediately following such acquisition, any 
other outpatient surgery facility in the Municipality of Anchorage, 
Alaska.
    Provided, however, that such prior approval shall not be required 
for:
    1. The establishment of a new outpatient surgery service or 
facility (other than as a replacement for an outpatient surgery service 
or facility, not operated by respondent, in the Municipality of 
Anchorage, Alaska, pursuant to an agreement or understanding between 
respondent and the person operating the replaced service or facility);
    2. Any transaction otherwise subject to this Paragraph IV of this 
order if the fair market value of (or, in case of an asset acquisition, 
the consideration to be paid for) the outpatient surgery facility 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.

V

    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 outpatient 
surgery facility in the Municipality of Anchorage, Alaska, for the 
joint establishment or operation of any new outpatient surgery 
facility, or part thereof, in the Municipality of Anchorage, Alaska. 
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 V 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 
States 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 in this Paragraph V.
    Respondent shall comply with reasonable requests by the Commission 
staff for additional information concerning any transaction subject to 
this Paragraph V of this order, within fifteen (15) days of service of 
such requests.
    Provided, however, that no transaction shall be subject to this 
Paragraph V of this order if:
    1. The fair market value of the assets to be contributed to the 
joint venture or other arrangement by outpatient surgery facilities 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 health care financing (such as through a 
health maintenance organization or preferred provider organization); or
    3. Notification is required to be made, and has been made, pursuant 
to Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a, or prior approval 
by the Commission is required, and has been requested, pursuant to 
Paragraph IV of this order.

VI

    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 outpatient surgery facility it operates in the 
Municipality of Anchorage, Alaska to be acquired by any other person 
(except pursuant to the divestiture required by Paragraph II 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.

VII

    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 Paragraph II of this order, the 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 Paragraph II 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 
Paragraph II of the order, including a description of all substantive 
contracts or negotiations for the divestiture and the identity of all 
parties contacted. Respondent shall also include in its compliance 
reports copies of all written communications to and from such parties, 
all internal memoranda, and all reports and recommendations concerning 
divestiture.
    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 IV, V, and VI of this order.

VIII

    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.

IX

    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.

Schedule A

    The assets to be divested (``Schedule A Assets'') shall consist of, 
without limitation, all Assets and Businesses relating to the Alaska 
Surgery Center, which were acquired by Columbia/HCA pursuant to the 
Acquisition (including all improvements, additions and enhancements 
made to such assets prior to divestiture).
* * * * *
    It is further provided That to the extent that any of the 
contracts, warranties with respect to Personal Property, licenses or 
other interests in the Intangible Personal Property, or other Schedule 
A Assets:
    (A) Also applies to facilities or operations other than those 
included in the Schedule A Assets, then during the period (the 
``Contract Period'') beginning on the closing date of the Acquisition 
and ending on the earlier of (1) the expiration of the term of the 
given contract or other right and (2) the second anniversary of 
Columbia/HCA's divestiture of the Schedule A Assets, Columbia/HCA, at 
the request of the owner or acquirer of the Schedule A Assets, shall 
use its reasonable best efforts to cause the services, property, or 
other benefits provided or made available under such a contract or 
other Schedule A Asset to continue to be available to the owner or 
acquirer of the Schedule A Assets on terms and conditions substantially 
similar to those presently in effect; or
    (B) Requires the consent of a third party in order to transfer or 
assign such Contract or other Schedule A Asset, then Columbia/HCA, at 
the request of the owner or acquirer of the Schedule A Assets, shall 
use its reasonable best efforts to obtain such consent and, if such 
consent cannot be obtained, to cooperate in any reasonable arrangement 
with the owner or acquirer of the Schedule A Assets designed to provide 
to such owner or acquirer the benefits of the given contract or other 
Schedule A Asset during the Contract Period on terms and conditions 
substantially similar to those presently in effect.

Appendix I

Agreement to Hold Separate

    This Agreement to Hold Separate (``Agreement'') is by and between 
Columbia/HCA Healthcare Corporation (``respondent'' or ``Columbia/
HCA''), 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 201 West Main Street, Louisville, Kentucky 40202; 
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.
    Whereas, on or about May 23, 1994, Columbia agreed to acquire all 
of the stock of Medical Care America, Inc. (``Medical Care America''), 
and thereby acquire Alaska Surgery Center, an outpatient surgical 
facility in Anchorage, Alaska, and other Medical Care America assets, 
including 95 other outpatient surgical facilities (the 
``Acquisition''); 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 attached Agreement 
Containing Consent Order (``Consent Order''), which would require the 
divestiture of certain assets listed in Schedule A of the Consent Order 
(``Schedule A Assets''), including the Alaska Surgery Center in 
Anchorage, Alaska, 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 
during the period prior to the final acceptance and issuance of the 
Consent Order by the Commission (after the 60-day public comment 
period), divestiture 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 divestiture of the Schedule A Assets as described in 
Paragraph II of the Consent Order and the Commission's right to have 
Alaska Surgery Center continue as a viable independent outpatient 
surgical facility; and
    Wheres, the purpose of this Agreement and the Consent Order is to:
    (i) Preserve Alaska Surgical Center as a viable independent 
outpatient surgical facility pending its divestiture, and
    (ii) 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 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, 
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 divestiture is 
not accomplished, to appoint a trustee to seek divestiture of the 
Schedule A Assets pursuant to the Consent Order, 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 divestiture required by the Consent Order has 
been completed.
    3. Respondent will hold the Schedule A Assets as they are presently 
constituted separate and apart on the following terms and conditions:
    a. The Schedule A Assets, as they are presently constituted, shall 
be held separate and apart and shall be operated independently of 
respondent (meaning here and hereinafter, Columbia/HCA excluding the 
Schedule A Assets), except to the extent that respondent must exercise 
direction an control over the Schedule A 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 its acquisition of the stock of 
Medical Care America, 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 all ownership and control of all Schedule A 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 governing 
body of the entity (``New Company Board'') shall have five members. 
Respondent may elect the members of the New Company Board; provided, 
however, that the New Company Board shall include no more than two 
members who are a director, officer, employee, or agent of respondent 
(``the respondent's New Company Board member(s)''). The New Company 
Board shall include a chairman who is independent of respondent and is 
competent to assure the continued viability and competitiveness of the 
Schedule A Assets. Meetings of the New Company Board during the term of 
this Agreement shall be stenographically transcribed and the 
transcripts 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 Schedule A Assets, the 
independent Chairman of the Board of the New Company, the New Company 
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.
    e. Respondent shall maintain the viability and competitiveness and 
the marketability of the Schedule A Assets and shall not sell, 
transfer, encumber (other than in the normal course of business), or 
otherwise impair their viability and competitiveness or their 
marketability.
    f. Except for the respondents New Company Board members, 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 viability and competitiveness of the Schedule A Assets, 
which employees shall be selected from Alaska Surgery Center's existing 
employee base and may also be hired from sources other than Alaska 
Surgery Center.
    h. With the exception of the respondent's New Company Board 
Members, respondent shall not change the composition of the New Company 
Board unless the independent chairman consents. The independent 
chairman shall have power to remove members of the New Company Board 
for cause. Respondent shall not change the composition of the 
management of the New Company except that the New Company 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, or 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 New Company Board. Nor shall the New Company or the 
New Company 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 outpatient surgical facilities 
in Anchorage, Alaska. 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 
respondent from sources other than the New Company, 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 
Company Board members shall not in their capacity as New Company Board 
members, 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 Company Board members shall enter a confidentiality 
agreement prohibiting disclosure of material confidential information. 
The respondent's New Company Board members shall participate in matters 
that come before the New Company 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 Company Board members shall not participate in any matter, or 
attempt to influence the votes of the other members of the New Company 
Board with respect to matters, that would involve a conflict of 
interest if respondent and the New Company were separate and 
independent entities.
    l. If necessary to assure compliance with the terms of this 
Agreement, the Consent Agreement, or the Consent Order, respondent may, 
but is not required to, assign an individual to the New Company for the 
purpose of overseeing such compliance (``on-site person''). The on-site 
person shall have access to all officers and employees of the New 
Company and such records of the New Company as he deems necessary and 
reasonable to assure compliance. Such individual shall enter into a 
confidentiality agreement prohibiting disclosure of material 
confidential information.
    m. 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 Company Board; provided that the New Company shall engage in a 
transaction, material or otherwise, that is precluded by this 
Agreement.
    n. Respondent shall provide the New Company with sufficient working 
capital to operate at its current rate of operation, and to carry out 
any capital improvement plans for the New Company which have already 
been approved.
    o. During the period commencing on the date this Agreement is 
effective and terminating on the earlier of (i) twelve months after the 
date the Consent Order becomes final, or (ii) the date contemplated by 
subparagraph 2.a (the ``Initial Divestiture Period''), respondent shall 
make available for use by he New Company funds sufficient to perform 
all necessary routine maintenance to, and replacements of, the Schedule 
A Assets (``normal repair and replacement''). After termination of 
Initial Divestiture Period and until the earlier of the date 
contemplated by either subparagraph 2.a or 2.b, respondent shall make 
available for use by the New Company each year an amount not less than 
that required for 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 and competitiveness 
and marketability of the Schedule A Assets.
    4. Should the Federal Trade Commission seek in any proceeding to 
compel respondent to divest any of the Schedule A 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 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 purpose of determining or securing compliance with this 
Agreement, 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 
representative or representatives of the Commission:
    a. Access during the office hours of respondent 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 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 or employees of 
respondent, who may have counsel present, regarding any such matters.
    7. This Agreement shall not be binding until approved by the 
Commission.

Analysis of Proposed Consent Order Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, a proposed consent order from Columbia/HCA Healthcare 
Corporation (``Columbia''). The agreement would settle charges by the 
Federal Trade Commission that Columbia's proposed acquisition of 
outpatient surgery facilities from Medical Care America, Inc. (``MCA'') 
would have violated Section 7 of the Clayton Act, and Section 5 of the 
Federal Trade Commission Act, if it had been carried out.
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or issue and serve the agreement's proposed 
order.
    Columbia owns and operates acute care hospitals in various 
localities, including an acute care hospital in the Anchorage, Alaska 
area which provides outpatient surgery services. MCA owns and operates 
ambulatory surgery centers in various localities, including Anchorage, 
Alaska. The complaint accompanying the proposed consent order concerns 
the proposed acquisition's impact upon competition for outpatient 
surgery services in Anchorage. According to the complaint, Columbia 
owns and operates Alaska Regional Hospital in Anchorage which provides 
outpatient surgery services. MCA owns and operates the Alaska Surgery 
Center in Anchorage.
    The consent order, if issued in final form by the Commission, would 
settle charges that the acquisition may substantially lessen 
competition in Anchorage. The complaint alleges that Columbia and MCA 
are competitors for outpatient surgery services in that market. The 
outpatient surgery services market in Anchorage, according to the 
complaint, 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 have anticompetitive 
effects in the Anchorage outpatient surgery services market, in 
violation of Section 7 of the Clayton Act and Section 5 of the Federal 
Trade Commission Act, unless an effective remedy eliminates such 
anticompetitive effects.
    The order accepted for public comment contains provisions requiring 
the divestiture by Columbia of the MCA outpatient surgery facility, 
Alaska Surgery Center, and related assets in Anchorage, Alaska. The 
purpose of the divestiture is to ensure the continuation of the Alaska 
Surgery Center as an ongoing, viable outpatient surgery facility 
independent of Columbia, and to remedy the lessening of competition in 
the Anchorage outpatient surgery services market resulting from the 
acquisition.
    The proposed order requires Columbia to obtain the approval of the 
Commission for the divestiture of the Alaska Surgery Center. Under the 
terms of the order, the required divestiture must be completed within 
twelve months of the date the order becomes final. If the required 
divestiture were not completed within the twelve-month period, Columbia 
would consent to the appointment of a trustee, who would have twelve 
additional months to effect the divestiture. The hold separate 
agreement executed in conjunction with the consent agreement requires 
Columbia, until the completion of the divestiture or as otherwise 
specified, to hold separate and preserve all of the assets and 
businesses of the Alaska Surgery Center.
    The proposed order provides that approval by the Commission of the 
divestiture shall be conditioned upon the agreement by the acquirer 
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 outpatient surgery 
facility in Anchorage, Alaska.
    The order would prohibit Columbia from acquiring any outpatient 
surgery facility in Anchorage without the prior approval of the Federal 
Trade Commission. It would also prohibit Columbia from transferring, 
without prior Commission approval, any outpatient surgery facility it 
operates in Anchorage to another person operating (or in the process of 
acquiring) an outpatient surgery facility in the area. These 
provisions, in combination, would give the Commission authority to 
prohibit any substantial combination of the outpatient surgery services 
operations of Columbia with those of any other outpatient surgery 
facility in Anchorage, unless Columbia convinced the Commission that a 
particular transaction would not endanger competition in Anchorage. The 
provision 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 from transferring 
all or any substantial part of any outpatient surgery facility in 
Anchorage 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 that its proposed acquisition would 
have violated the law, as alleged in the Commission's complaint.
Donald S. Clark,
Secretary.
[FR Doc. 94-23583 Filed 9-22-94; 8:45 am]
BILLING CODE 6750-01-M