The Federal Trade Commission has warned Tennessee lawmakers that proposed legislation allowing Ballad Health’s Certificate of Public Advantage to expire without competing hospitals in place could harm patients by increasing costs and reducing care quality while the system faces no meaningful regulatory check.
In an April 1 letter to Tennessee Rep. David Hawk, the FTC cautioned that House Bill 2278 and Senate Bill 2414 — which would allow the Ballad COPA to expire June 30, 2028 — could result in what the agency called the “worst possible outcome for patients”: a hospital system that evades antitrust scrutiny at the merger stage by virtue of the COPA, and then evades state regulatory oversight on the back end when the COPA expires.
Under the current COPA, the Tennessee Department of Health oversees the 20-hospital system’s quality of care, access to services and population health initiatives. If the legislation passes and the COPA expires as scheduled, all Tennessee Department of Health supervision would end. Only pricing restrictions would survive, enforceable by the Tennessee Attorney General for no longer than five years after expiration.
The FTC’s position is nuanced.
The agency generally recommends that states not create new COPA laws and repeal existing ones, but argues repealing a COPA in the absence of competing hospital systems hands a monopolist unconstrained market power, free from both state regulation and antitrust enforcement.
“When COPAs expire the risk of price and quality harms increases significantly, including harm to quality of care and availability of healthcare services,” the letter states.
The FTC originally opposed the merger that created Ballad, issuing public comments and testimony from 2016 to 2017 before the system was formed in 2018. The agency noted that Ballad was initially prohibited from opposing Certificate of Need applications by new competitors. That condition has since been removed, leaving Ballad free to oppose market entrants.
The same letter addressed a separate but related pair of bills — House Bill 819 and Senate Bill 1369 — that would remove CON requirements for acute care hospitals. The FTC endorsed the goal: removing CON barriers is consistent with the agency’s longstanding advocacy and with the Trump administration’s Rural Health Transformation Program, which argues that new hospital competition in Northeast Tennessee would help restore what was lost when Ballad formed.
However, the FTC flagged a timing issue. As amended by the Senate, the CON repeal would not take effect until July 1, 2030 — two years after the COPA expires in 2028. That gap would leave Ballad operating as an unregulated monopoly with no new competition on the horizon and no state oversight in place.
The letter urged the Tennessee General Assembly to repeal CON laws “as soon as possible” — and no later than the date any COPA expires — to avoid undermining the legislature’s own stated goal of increasing competition.
In an April 6 statement provided to Becker’s, Ballad pushed back on the FTC’s framing, arguing that quality-of-care oversight does not disappear when the COPA ends.
“Oversight of the quality of care provided by Ballad Health is not changed by this legislation,” the system said. “Regardless of the COPA, the oversight of antitrust in Tennessee lies with the Attorney General, who acts independently.”
The health system also argued that the COPA was created to prevent rural hospital closures and that the state department of health has independently and transparently affirmed the public advantage of the arrangement each year since formation. The system said it regards the suggestion that oversight would be eliminated as “factually incorrect.”
Ballad operates 20 hospitals across a 29-county region spanning Tennessee, Virginia, Kentucky and North Carolina, serving about 1.1 million people, according to its website. The system has previously faced criticism over care quality — including a December 2024 KFF Health News report that found Ballad had failed to meet roughly 75% of care quality goals set by Tennessee and Virginia over the prior three fiscal years.
The FTC has cited Ballad as a cautionary example when opposing similar hospital mergers in other parts of the country.
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